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Fuchs v. Cristal Concrete Corp.

July 18, 2006

X JOHN FUCHS, ANTHONY MACAGNONE, DAVID HAINES, MICHAEL CONROY, GEOFFREY JAMES, PATRICK MORIN, WILLIAM MACCHIONE, WALTER KRUPA, ALAN EHL, WILLIAM WEITZMAN, JAMES MALCOLM, JOSEPH OLIVIERI, ARTHUR GODSELL, ROBERT CARLINO, PAUL O'BRIEN, JOSEPH GANIRO, ROSS PEPE, RICHARD O'BEIRNE, AND DONALD STUHLMILLER AND JAMES LOGAN, AS TRUSTEES OF THE EMPIRE STATE CARPENTERS WELFARE, PENSION VACATION, ANNUITY, SCHOLARSHIP, LABOR-MANAGEMENT COOPERATION AND CHARITABLE TRUST FUNDS, PLAINTIFFS,
v.
CRISTAL CONCRETE CORP., AND CRISTAL CONSTRUCTION & DEVELOPMENT CORP., DEFENDANTS.



The opinion of the court was delivered by: E. Thomas Boyle United States Magistrate Judge

MEMORANDUM OPINION AND ORDER

Plaintiffs, the Trustees of the Empire State Carpenters Welfare, Pension, Vacation, Annuity, Scholarship, Labor-Management Cooperation and Charitable Trust Funds ("plaintiffs" or the "Trustees") have brought this action pursuant to Sections 502 and 515 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132 and 1145, and Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185. The plaintiffs allege that defendant Cristal Concrete Corp. ("Cristal Concrete") failed to pay employee benefit contributions pursuant to a series of collective bargaining agreements ("CBA" or "Agreement") between the Empire State Regional Council of Carpenters (the "Union") and Cristal Concrete. The plaintiffs further allege that, although second defendant Cristal Construction & Development Corp. ("Cristal Construction") was not a signatory to the CBA, Cristal Construction is bound by the agreement and liable to the Funds for unpaid contributions under the "single employer doctrine" and/or the "alter ego doctrine." Plaintiffs also allege that defendants violated the CBA provisions prohibiting the formation of a "double breasted operation." The plaintiffs seek: (1) an order declaring that Cristal Concrete and Cristal Construction are a single employer; (2) an order awarding damages for improperly unreported and/or unpaid fringe benefit contributions to the Funds; (3) $171,371.89 in damages from the defendants as well as interest, liquidated damages equal to either twenty percent of the principal unpaid contributions or the amount of interest, whichever is higher, costs, disbursements, and reasonable attorneys fees; (4) leave to conduct audits of the defendants' financial records; (5) an order directing the defendants to comply with the terms of the collective bargaining agreement; and (6) any other relief that the Court deems appropriate. (Pls.' Compl. ¶¶ a-j.)

The defendants argue that they paid all monies due to the Funds in accordance with the collective bargaining agreement. (Defs.' Pre-Trial Statement ¶ 1.) Defendants also argue that the plaintiffs are seeking contributions on behalf of employees who were not doing the type of work covered by the collective bargaining agreement. (Id.) Finally, defendants argue that plaintiffs are seeking contributions in the absence of a written agreement requiring contributions. (Id.)

The Court held a bench trial on October 24, 2005, at the end of which the defendants moved for dismissal of this action. The defendants called no witnesses and offered no evidence in support of their defense. The Court reserved judgment pending the submission of post-trial briefs. This Memorandum Opinion and Order constitutes the findings of fact and conclusions of law, pursuant to Rule 52 of the Federal Rules of Civil Procedure.

I. BACKGROUND

A. Findings of Fact

Defendants Cristal Concrete and Cristal Construction are both in the construction business. Cristal Concrete's chief executive officer is Paul Bevacqua, and the company's mailing address is 1026 Main Street, Holbrook, New York 11741. (Pls.' Ex. 18 at 7.) Cristal Construction's chief executive officer is Anthony Spillabotte, and the company's mailing address is 1024 Main Street, Holbrook, New York 11741. (Pls.' Ex. 19 at 7.)

The plaintiffs are fiduciaries of employee benefit plans (the "Funds") governed by ERISA as defined by Section 3(21)(A) of ERISA, 29 U.S.C. § 1002(21)(A). The Funds are employee benefit plans within the meaning of ERISA, 29 U.S.C. § 1002(3), and are maintained pursuant to the terms of collective bargaining agreements ("Agreement" or "CBA") between the United Brotherhood of Carpenters and Joiners of America, Empire State Regional Council of Carpenters (the "Union") and various employers who are required to make contributions to the Funds on behalf of their employees. The Funds are operated pursuant to the terms of the collective bargaining agreement and an Agreement and Declarations of Trust (the "Trust Agreement") incorporated into the collective bargaining agreement by reference. (Pls.' Ex. 5, Art. VII.) The Trust Agreement sets forth the rules under which the Funds are administered. (Id.)

The parties do not dispute that defendant Cristal Construction never signed any agreement with the Union. Defendant Cristal Concrete, on the other hand, signed several agreements with the Union. On April 27, 1999, Cristal Concrete entered into a "one job" agreement with the Union to construct a Modell's in Bay Shore (the "Modell's one job agreement"). (Pls.' Ex. 1.) The Modell's one job agreement specified that it incorporated fully by reference the Union's collective bargaining agreement and trust agreements in effect at the time. (Id.) Similarly, on April 11, 2001, Cristal Concrete entered into another "one job" agreement with the Union for the construction of a King Kullen grocery store in Manorville, New York (the "King Kullen one job agreement"). (Pls.' Ex. 2.) The King Kullen one job agreement also specified that it incorporated fully by reference the Union's collective bargaining agreement and trust agreements in effect at the time. (Id.)

At some point between April 11, 2001 and October 11, 2001, Cristal Concrete also executed a "compliance form" agreement which stated that Cristal Concrete "acknowledges the existence of a current collective bargaining relationship and agreement with [the Union] and agrees to be bound by a new agreement with [the Union] covering the period July 1, 1999 through June 30, 2002 embodying all the terms and conditions contained in the collective bargaining agreement . . . ." (Pls.' Ex. 3; see also Transcript of Trial, before Judge Boyle, dated Oct. 24, 2005 ("Transcript"), at 54, 65-66.)

On June 26, 2002, the Union contacted Cristal Concrete in writing in order to obtain said defendant's financial records for the purpose of conducting an audit of Cristal Concrete's payments to the Funds during the preceding three-year period, as provided for in the collective bargaining agreement. (Pls.' Ex. 6.) Cristal Concrete did not respond. (Tr. at 28.) Several months later, by a letter dated November 12, 2002, plaintiffs' counsel notified Cristal Concrete of its breach with respect to the submission of financial records for an audit under the CBA, and informed Cristal Concrete that the Trustees were "authorized to file" a complaint in federal court in the absence of compliance. (Id.) Plaintiffs filed the complaint in this action on April 14, 2004.

B. Testimony

1. Alan Ehl's Testimony

Alan Ehl, the Union's regional director on Long Island (hereinafter "Ehl"), testified that at some point between when Cristal Concrete signed the two "one job" agreements with the Union (which were in effect for the duration of the jobs) and when it signed the "compliance form" agreement, Cristal Concrete signed a collective bargaining agreement for the period October 1996 to June 30, 1999.*fn1 (Tr. at 18, 20-1.) Ehl testified that the collective bargaining agreement for the period October 1996 to June 30, 1999, admitted as plaintiffs' Exhibit 4, is the agreement fully incorporated by reference in the Modell's one job agreement signed by Cristal Concrete on April 27, 1999. (Id. at 24-5.) Similarly, Ehl testified that the collective bargaining agreement for the period July 1, 2000 through April 30, 2004, admitted as plaintiffs' Exhibit 5, is the agreement fully incorporated by reference in the King Kullen one job agreement signed by Cristal Concrete on April 11, 2001. (Id.) Ehl testified that there was not a separate collective bargaining agreement in existence covering the one-year period between June 30, 1999 and July 1, 2000, due to union mergers and work rule negotiations. (Id. at 58-59.) Ehl testified, however, that this year-long gap was filled by a clause in the collective bargaining agreement covering the period from October 1996 through June 30, 1999. (Id. at 59.) The clause provides that the agreement shall remain in effect through June 30, 1999, and unless at least 60 days' notice of an intent to modify or terminate the agreement is given prior to that date, the agreement shall remain in effect for a further period of one year. (Id.; see Pls.' Ex. Art. XXI.)

According to Ehl's testimony, when an employer signs any one of the Union's contracts, it is given a "rate sheet" which sets forth the hourly wage for each category of employee. Ehl testified that regardless of the nature of the duties performed, a member of a certain union gets paid according to the rates for that union as set out in the wage sheet and listed in the collective bargaining agreement. (Tr. at 157.) Thus, for example, even if a union carpenter performs masonry work on a job, he still must be paid at the union carpenter rate. (Id. at 158.) The CBA explicitly states that carpenters cannot be paid any less than the rate of compensation stated within it. (Pls.' Ex. 5, Art. VI.) Ehl stated that it is part of his job to oversee the agents in the field who ensure that the union employees get paid the proper rate. (Tr. at 158-59.)

Ehl also testified that the rate sheet breaks down the amounts that the employer is required to pay into the benefit funds for each employee hour worked. (Id. at 30; see also Pls.' Exs. 9A, 9B, 10, 11.) Based on the amount of their benefit contributions, the employees purchase "stamps" that they use to redeem their benefits. (Tr. at 48-49.) Ehl testified that Cristal Concrete purchased fringe benefit contribution stamps for employees in accord with the Union's rate sheets and the terms set forth in the CBA. (Id. at 37-38, 48-49.)

Ehl further testified that pursuant to the terms of the collective bargaining agreement, the Union conducts one audit of each signatory contractor during the lifetime of that employer's contract with the Union. (Id. at 26.) In the event that an employer fails to comply with the audit request, the Union will "send a demand letter" to that employer. (Id. at 27-8.) If that endeavor is unsuccessful, the Union will refer the matter to its attorneys. (Id..) When presented with plaintiffs' exhibits 6 and 7, Ehl identified them as the demand letters that the Union and its ...


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