which would suggest an absence of corporate formalities, inadequate capitalization or the perpetration of fraud by means of the corporate vehicle. See Walter E. Heller & Co., 730 F.2d at 53. The only allegation of any substance is contained in para. 20 of the Mangan Affidavit, which alleges that Charles Francolini purchased a plane using corporate funds and took personal income tax deductions for its depreciation while Lidelco paid for its upkeep. Mangan further claims the plane was sold and Lidelco received none of the proceeds. The Fund has, however, not provided any corroboration for these accusations. Mangan has no personal knowledge of these events and no receipts or records have been produced by the Fund. In any event, even if these allegations were substantiated, the Court does not find that they rise to the level necessary to pierce the corporate veil.
In addition, the Fund claimed at oral argument, that the fact that the Francolinis' personally guaranteed loans made to the corporation and guaranteed, pursuant to the 1980 settlement agreement, that contributions would be made to the Fund, serves to prove that Lidelco was simply an alter ego of the Francolinis. However, an opposite view is equally viable. The rationale behind piercing a corporate veil is that an individual has used the corporate entity for solely personal purposes and disregarded the corporate form. The sole purpose of the corporation in such a situation is an effort to avoid personal liability on the part of the individual. Here, there is no evidence that the Francolinis' were using Lidelco to avoid personal liability, they were in fact subjecting themselves to potential liability by guaranteeing those loans.
Accordingly, the Court finds that the Francolinis' are not liable for Lidelco's withdrawal liability under an alter ego or fraudulent conveyance theory.
2. Failure to Provide Notice
If the Court had found Charles and Jean Francolinis to be "employers" they would have been entitled to statutory notice. In Connors v. Peles, 724 F. Supp. 1538, 1571 (W.D.Pa. 1989), the court said that even if the plaintiff could show that the individual defendants were the alter ego of the corporation they would need to demonstrate that they were provided with statutory notice. The court there said that notice addressed solely to the corporation was insufficient as regards the individual shareholders of the close corporation.
In this case the only notice received by the Francolinis was the two December 15, 1989, letters mailed to Jean and Charles Francolini respectively, in Charlottesville. These letters notified Jean and Charles that the Fund had determined that their relationship to Lidelco made them personally liable and that since no payment had been made they had 60 days to cure the default by tendering full payment. In the first instance, the statute does, as Defendants note, require the Fund to notify the employer, as soon as practicable after the employer's withdrawal, of the amount of the withdrawal liability and the schedule of payment. 29 U.S.C. § 1399(b)(1). The employer then has a right to contest the determination, proceeding to arbitration if necessary. Here, the Fund failed to comply with the statute at all, let alone as soon as practicable after withdrawal. The December 15 letter was in fact a notice of non-payment, and not the notice of liability required by § 1399(b)(1).
Charles and Jean Francolini never had the opportunity to challenge the assessment of liability since they never received individual notice.
It is true that most courts hold that notice to one corporate entity of a control group serves as notice to all members of the control group. Chicago Truck Drivers v. Central Transport, 888 F.2d at 1163; IUE AFL-CIO Pension Fund v. Barker & Williamson, 788 F.2d 118 (3d Cir. 1986). This is generally held to be consistent with the dictates of 29 U.S.C. § 1301(b)(1) that entities under common control be treated as a single employer. Although this reasoning may be appropriate for dealing with multiple corporations, it does not transfer to individuals. The Court finds it to be apparent that Lidelco, Jean Francolini and Charles Francolini are separate entities, and accordingly entitled to separate notice.
3. Effect of Vacating the Default Judgment
Defendants' final argument is that since the complaint against the individual defendants is based upon the default judgment being entered against Lidelco, the vacating of that judgment should result in dismissal of the complaint. As the Court has already found that there exists grounds for summary judgment, it is not necessary to consider this issue.
For the reasons stated above, Defendants' Motion for Summary Judgment is DENIED as to Lidelco, Inc., and GRANTED as to the individual defendants, Charles and Jean Francolini. The Clerk shall enter judgment accordingly.
Dated: Brooklyn, New York
February 4, 1992
Carol Bagley Amon
United States District Judge