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NYSA-ILA MEDICAL & CLINICAL SERV. FUND v. CATUCCI
July 30, 1999
NYSA-ILA MEDICAL & CLINICAL SERVICES FUND, BY AND THROUGH ITS TRUSTEES, JAMES A. CAPO, M. BRIAN MAHER, RICHARD F. GRONDA, DAVID J. TOLAN, OLE A. SWEEDLUND, JOHN BOWERS, ALBERT CERNADAS, FRANK LONARDO, AND GERALD OWENS, PLAINTIFF,
SABATO (A/K/A SAL) CATUCCI, KEVIN CATUCCI, RONALD CATUCCI, AND KEITH CATUCCI, DEFENDANTS.
The opinion of the court was delivered by: Motley, District Judge.
Plaintiff, an employee medical services fund, claims that
defendants controlled Salco Trucking Corporation and wrongfully
withheld that corporation's payments to the fund. In a prior
action, plaintiff won a judgment holding the corporation liable
for delinquent contributions to the fund. In the present action,
plaintiff seeks to hold defendants liable for their role in the
Salco delinquency, alleging that each defendant acted as the
corporation's alter ego (Count I), breached fiduciary duties to
the fund (Count II), and embezzled fund assets (Count III).
Defendants responded with a counterclaim for attorney's fees.
Defendants have moved for summary judgment and plaintiffs have
cross-moved for partial summary judgment. For the reasons given
below, the court grants in part and denies in part both parties'
motions. As to defendant Sabato Catucci, the court grants
plaintiff summary judgment on Count II, grants defendant summary
judgment on Count III, and denies both parties summary judgment
on Count I. As to defendants Kevin Catucci, Keith Catucci, and
Ronald Catucci, the court grants defendants summary judgment on
Plaintiff NYSA-ILA Medical & Clinical Services Fund ("Fund")
provides funding for medical clinics serving longshore employees
(and retirees, dependents, and others) as a multiemployer benefit
plan within the meaning of the Employee Retirement Income
Security Act ("ERISA"), §§ 3(3), 3(37), 4, 29 U.S.C. § 1002(3),
1002(37), 1003. Compl. ¶ 4. The Fund is a jointly administered
labor-management trust fund established in collective bargaining
agreements (CBAs) between the New York Shipping Association, Inc.
("NYSA") and the International Longshoremen's Association,
AFL-CIO ("ILA") in accordance with the Labor Management Relations
Act ("LMRA"), § 302(c)(5), 29 U.S.C. § 186(c)(5). Compl. ¶ 4.
CBAs between Salco Trucking Corporation ("Salco"), a now-bankrupt
trucking company, and an ILA local union are the source of the
disputed Salco obligations to the Fund. Id. ¶¶ 7-9.
B. Salco and the Catuccis
Salco was incorporated in 1970, with ownership and control
split between Sabato (a/k/a Sal) Catucci and Reuben Coher.
Epstein Aff., Ex. B. On February 1, 1974, Sabato Catucci gained
sole ownership and control when Reuben Cohen resigned as officer
and director, transferring his 50 percent interest to Sabato
Catucci. Id. Salco then became a family business, with all
shares and corporate offices held by Sabato Catucci, his sons
Kevin Catucci and Keith Catucci, and his brother Ronald Catucci.
Sabato Catucci, maintaining a controlling interest, ran Salco and
made all decisions on its payments. Pl.'s R. 3(g) Stmt. ¶¶ 7-8.
From February 1, 1974 to January 5, 1988, Sabato Catucci was the
sole shareholder and principal, owning all 200 shares of stock.
On January 5, 1998, he transferred a 96-share minority interest
to his sons, split 48 shares each for Kevin Catucci and Keith
Catucci. Id. ¶ 5. A shareholder meeting that day elected Sabato
Catucci as President, Kevin Catucci as Vice President, Keith
Catucci as Secretary/Treasurer, and all three as Directors. Id.
The role of defendant Ronald Catucci is a bit murkier. Sabato
Catucci testified that Ronald Catucci was Secretary-Treasurer of
Salco between 1974 and 1988; no records show any such
appointment, however. Id. ¶ 12. Sabato Catucci elaborated that
Ronald Catucci signed bank papers and procured loans for Salco,
but had no say in the company's policies and finances, and
essentially served in a "figurehead position" that began before
1988 and continued afterwards. Id. ¶ 13. Ronald Catucci
testified that he served as Salco's "bookkeeper" at all times
since 1977 but did not hold any Salco office, was never a Salco
officer, and was not Salco's Treasurer. Id. ¶¶ 14-15. At least
in the late 1980s, however, Ronald Catucci signed as Treasurer of
the corporation on Salco's federal corporation income tax
returns, which must be signed by a corporate officer, and on
Salco's federal income tax returns. Id. ¶¶ 16-18 (federal
corporation income tax return covering September 1986 to August
1987; federal income tax returns for 1986, 1987, 1988, and 1989).
Ronald Catucci also signed Salco checks bearing notations
indicating that they were loan repayments by Salco. Id. ¶¶
C. Salco's Delinquent Contributions to the Fund
Salco failed to make contributions to the Fund that the Fund
believed Salco was obligated to make under two consecutive
three-year CBAs with effective dates of April 1, 1984 ("1984
CBA") and April 1, 1987 ("1987 CBA"). Compl. ¶ 8. On September
14, 1990, plaintiff filed an action against Salco to recover
delinquent contributions, NYSA-ILA Med. & Clinical Servs. Fund
v. Salco Trucking Corp., 90 Civ. 5949(CSH) (S.D.N.Y.) ("1990
action"). On April 15, 1993, plaintiff was awarded
summary judgment as to Salco's liability under the 1984 CBA but
not the 1987 CBA. Id., 1993 WL 119702 (Apr. 15, 1993 memorandum
opinion and order). On July 11, 1995, after proceedings to
determine the proper relief for Salco's breaches of the 1984 CBA,
judgment was entered against Salco in the amount of $142,114.51.
Id., 1995 WL 404863 (July 6, 1995 memorandum opinion and
order); Fier Aff., Ex. A. (July 11, 1995 judgment for
$142,114.51). Less than three months later, on October 5, 1995,
Salco filed a voluntary Chapter 7 bankruptcy petition, signed by
Kevin Catucci as Vice President, in the United States Bankruptcy
Court for the Eastern District of New York. Epstein Aff., Ex. A
On January 22, 1996, plaintiff filed this action against the
Catuccis for their alleged roles in the Salco delinquencies
originating from April 1, 1984 to March 31, 1990 under both the
1984 CBA and the 1987 CBA. Compl. ¶ 10. Count I (Delinquent
Contributions Under ERISA) seeks to pierce the Salco corporate
veil to hold the Catuccis liable for the judgment against Salco
in the 1990 action under the 1984 CBA as well as for delinquent
contributions by Salco under the 1987 CBA. Count II (Breach of
ERISA Fiduciary Duty) alleges that Sabato Catucci was a fiduciary
of the Fund who used his discretionary control over Salco assets
to deny the Fund its contributions from Salco and to benefit
himself. Count III (Conversion of Plan Assets) asserts a civil
claim for damages resulting from the federal crime of theft or
embezzlement from an employee benefit plan. Defendants
counterclaim under New York state law for attorney's fees for a
prevailing party in an action for fraud, misconduct, and breach
of fiduciary duty.
A. Breach of Fiduciary Duty
1. Statute of Limitations
The limitations period for an ERISA fiduciary beach action is:
(1) six years after (A) the date of the last action
which constituted a part of the breach or violation,
or (B) in the case of an omission, the latest date on
which the fiduciary could have cured the breach or
(2) three years after the earliest date on which
the plaintiff had actual knowledge of the breach or
except that in the case of fraud or concealment, such
action may be commenced not later than six years
after the date of discovery of such breach or
The three-year limitations period applicable once a plaintiff
has "actual knowledge of the breach or violation" bars any claims
based solely on Salco's failures to meet deadlines between 1984
and 1990 for Fund contributions. By 1990, when plaintiff filed a
civil action against Salco for delinquent contributions, it
clearly had actual knowledge that Salco, the company that Sabato
Catucci controlled, had been in delinquency, and therefore in
possession of Fund assets, since 1984, when Salco should have
begun making contributions. Because a three-year limitations
period beginning ...