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July 15, 1988

HARRISON COMBS, et al., Plaintiffs,
LEWIS K. LEISHMAN d/b/a LEISHMAN COAL COMPANY, a sole proprietorship, Defendant/Third-Party Plaintiff, v. CENTRAL OHIO COAL COMPANY, Third-Party Defendant

The opinion of the court was delivered by: BRYANT


 Plaintiffs, as trustees of the United Mine Workers of America 1950 Pension Plan and 1974 Pension Plan brought this action against defendant Lewis K. Leishman, doing business as Leishman Coal Company, to collect withdrawal liability allegedly owed under the Employee Retirement Income Security Act of 1974, as amended by the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. §§ 1001 - 1461. Defendant Leishman has filed a third party action against Central Ohio Coal Company seeking indemnification and reimbursement. This matter is before the court on plaintiffs' motion for summary judgment, defendant Leishman's cross motion for summary judgment, and third party Central Ohio Coal Company's motion to dismiss.


 A. Statutory Framework

 This case arises under the Multiemployer Pension Plan Act Amendments of 1980 ("MPPAA"), 29 U.S.C. §§ 1381-1461 (1982 and 1986 Supp.). The MPPAA sets out a mechanism whereby employers who withdraw from a multiemployer pension plan must contribute to the plan a reasonable portion of unfunded vested employee benefits. The statutory scheme provides that as soon as practicable after an employer withdraws from a multiemployer plan, the plan is required to (1) determine the amount of the employer's withdrawal liability, (2) notify the employer of the amount of the withdrawal liability and a schedule for liability payments, and (3) collect the amount of the withdrawal liability from the employer. 29 U.S.C. §§ 1382, 1399(b)(1). The employer may ask the plan to review specific aspects of the withdrawal liability assessment within 90 days of its receipt of notice that liability has been assessed. Section 1399(b)(2)(A). The plan is then to conduct a reasonable review of the issues raised in the review request and to notify the employer of the results. Section 1399(b)(2)(B). Either party may initiate arbitration of a dispute concerning withdrawal liability within a 60 day period after the earlier of (1) the date of the plan's response to the employer's request for review, or (2) 120 days after the date of the employer's request for review. Section 1401(a)(1). The parties may jointly initiate arbitration within 180 days after the date of the plan's notice and demand for withdrawal liability. Id.

 The employer from whom a plan has demanded withdrawal liability is required to make periodic payments on the schedule established by the plan during the pendency of a request for review or arbitration. Sections 1399(c)(2), 1401(d). If no arbitration proceeding is initiated, the amounts demanded by the plan are due and owing on the schedule established by the plan sponsor and the plan may bring an action for collection. Section 1401(b)(1).

 In the event of a default, the plan may require immediate payment of the outstanding amount of the employer's liability, plus accrued interest on the total outstanding liability from the due date of the first payment that was not timely made. Section 1399(c)(5). An employer is considered to have defaulted if (1) the employer fails to make any payment when due if the failure is not cured within 60 days after receipt by employer of written notice from the plan of failure to make a timely payment or (2) upon the occurrence of an event defined in the plan's rules which indicates a substantial likelihood that an employer will be unable to pay its withdrawal liability. *fn1" Id.

 If an action to collect withdrawal liability results in judgment in favor of the plan, the plan is entitled to an award of the unpaid contributions, interest on the unpaid contributions, an amount equal to the interest on the contributions or liquidated damages established under the plan, and reasonable attorney's fees and costs. Section 1132(g)(2).

 B. Facts

 The facts in this case are not in dispute. Plaintiffs are the trustees of the United Mine Workers of America ("UMWA") 1950 Pension Plan and the 1974 Pension Plan ("the Plans"). Defendant Lewis K. Leishman was, at the time of the events giving rise to this action, doing business as Leishman Coal Company, a sole proprietorship engaged in mining coal by the auger mining method. In November 1973, Leishman entered into an employment agreement with the Central Ohio Coal Company ("the coal company") under which Leishman would mine coal at the company's Muskingham mine in Guernsey, Muskingham, Noble and Morgan Counties, Ohio. Pursuant to that agreement, Leishman was required to hire UMWA labor and to make regular contributions on behalf of those employees to the UMWA Welfare and Retirement Fund. The UMWA Welfare and Retirement Fund ("the Fund") was established by the UMWA and the Bituminous Coal Operators Association ("BCOA") under the Bituminous Coal Wage Agreement of 1974 and is governed by the National Coal Wage Agreement of 1978 and subsequent amendments ("the Agreements"). The Funds include the 1950 and 1974 Pension Plans of which plaintiffs are the trustees.

 In August of 1980, a representative of the coal company informed defendant that its contract with the coal company was to be terminated at the close of the current projects. Defendant ceased all auger mining work for the coal company in January 1981, and at that time discontinued payments to the Fund.

 Plaintiffs thereafter determined that defendant had ceased operations covered by the Agreements. By letter of March 31, 1982, plaintiffs notified defendant of their finding that Leishman had withdrawn from the Plans in the year ending June 30, 1981 and demanded payment of withdrawal liability of $ 222,181.39 to the 1950 Plan and $ 95,208.84 to the 1974 Plan. The letter also set out defendant's right to request review by the plaintiffs of their determinations. Defendant responded by letter of June 25, 1982 which requested that plaintiffs review their assessment of withdrawal liability. Plaintiffs notified defendant on July 9, 1982 that absent a request for review of specific matters related to the withdrawal liability determination, any review would be impossible. *fn2"

 On September 10, 1982, defendant requested that plaintiffs review the assessment of withdrawal liability in light of Leishman's contention that it was a supervisory employee of the coal company, rather than an independent contractor employer, and therefore had no obligation to contribute to the Fund. Defendant also requested that the dispute be submitted to arbitration in the event that it could not be resolved by agreement between the parties. The trustees' letter of September 14, 1983 responded to each of the points raised by defendant and concluded that modification of the liability assessment was unwarranted. Plaintiffs also directed defendant to the requirement that defendant initiate arbitration. Defendant subsequently notified the trustees that it wished to stay all proceedings related to the assessment of liability, pending disposition by the Supreme Court of a case involving the constitutionality of certain provisions of the MPPAA. *fn3" Plaintiffs ...

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