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Board of Trustees v. Grates Building Enterprises

September 28, 2006

BOARD OF TRUSTEES, LABORERS' LOCAL NO 35 PENSION FUND AND BOARD OF TRUSTEES, LABORERS' LOCAL NO. 35 DEFINED CONTRIBUTION FUND, AND BOARD OF TRUSTEES, LABORERS' LOCAL HEALTH CARE FUND, AND BOARD OF TRUSTEES, LABORERS' LOCAL NO. 35, TRAINING AND EDUCATION FUND, AND LOCAL UNION NO. 35, LABORERS' INTERNATIONAL UNION OF NORTH AMERICA, AFL-CIO, PLAINTIFFS
v.
GRATES BUILDING ENTERPRISES, INC., AND VITA M. GRATES, AND GREGG G. GRATES, DEFENDANTS.



The opinion of the court was delivered by: Hon. Norman A. Mordue, Chief U.S. District Judge

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Plaintiffs, comprised of a multi-employer trust fund, various benefit funds of Laborers' Local 35 and the union itself, have filed a complaint alleging that the defendant employer and its officers, violated sections 404, 406, and 515 of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. §§ 1104, 1106, and 1145 and 1145, and section 301(a) of the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 185(a), by failing to timely remit fringe benefit contributions and deductions to plaintiffs from August 2003 through December 2004. Plaintiffs move to dismiss two counterclaims and six affirmative defenses asserted by defendants in their responsive pleading pursuant to Rule 12(b)(1) and (6) of the Fed. R. Civ. P.. In the alternative to dismissal of defendants' second counterclaim, plaintiffs seek a more definite statement of the facts and circumstances upon which it is based. Plaintiffs also move for summary judgment pursuant to Rule 56 of the Fed. R. Civ. P. and seek an award of delinquent fringe benefit contributions, deductions, interest, liquidated damages, costs and disbursements, and attorneys' fees and costs.

II. FACTS

According to the complaint and plaintiffs' motion papers, defendant Grates Building Enterprises, Inc., is party to a collective bargaining agreement with plaintiff Laborers' International Union of North America, Local Union No. 35 ("Agreement"). The Agreement obligates defendants to remit fringe benefit contributions and deductions to plaintiffs for all hours worked by employees who are covered by the Agreement, i.e., performing bargaining unit work. Plaintiffs allege that defendants Vita Grates and Gregg Grates are the owners and officers of the company and controlled its affairs.

In accordance with the Agreement, the defendant employer is obligated to make payment of contributions owed to the plaintiff Board of Trustees of the Pension Fund, the plaintiff Board of Trustees of the Defined Contribution Fund (sometimes referred to as the "Annuity" Fund in the Agreement), plaintiff Board of Trustees of the Health Care Fund, and plaintiff Board of Trustees of the Training Fund on or before the 15th day following the month in which covered construction laborer work is performed. In accordance with the Agreement, the defendant employer is obligated to submit monthly reports listing the names, Social Security numbers, hours worked and job location for each employee performing covered employment as a construction laborer (or a negative report if no such employment took place), which reports are to be submitted on or before the same due date as provided for contributions owed to plaintiff Boards of Trustees of the ERISA benefit funds. In accordance with the Agreement, the defendant employer is also obligated to withhold from the basic wages of construction laborer employees who have executed a Dues Deduction Authorization form the amount specified under the Agreement for a dues deduction, payable to the plaintiff Union.

Pursuant to the Agreement, the defendant employer, if delinquent in remitting contributions and deductions, is obligated to pay the delinquent amounts as well as interest, liquidated damages, and attorneys' fees and costs. Based on the defendant employer's alleged failure to remit benefit contributions and deductions to plaintiffs from August 2003 through December 2004, plaintiffs commenced the instant action to collect the delinquent contributions and deductions as well as applicable interest, liquidated damages, costs and fees of collection, and attorneys' fees.

III. DISCUSSION

A. Summary Judgment Standard

Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c). Substantive law determines which facts are material; that is, which facts might affect the outcome of the suit under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 258 (1986). Irrelevant or unnecessary facts do not preclude summary judgment, even when they are in dispute. See id. The moving party bears the initial burden of establishing that there is no genuine issue of material fact to be decided. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). With respect to any issue on which the moving party does not bear the burden of proof, it may meet its burden on summary judgment by showing that there is an absence of evidence to support the nonmoving party's case. See id. at 325. Once the movant meets this initial burden, the nonmoving party must demonstrate that there is a genuine unresolved issue for trial. See Fed. R. Civ. P. 56(e). Although all inferences must be drawn in favor of the nonmoving party, mere speculation and conjecture is insufficient to preclude the granting of the motion. Western World Ins. Co. v. Stack Oil, 922 F.2d 118, 121 (2d Cir. 1990); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (holding that nonmoving party must do more than merely show "some metaphysical doubt" as to material facts to escape summary judgment). It is with these considerations in mind that the Court first addresses plaintiffs' motion for summary judgment.

B. Liability Under ERISA

Pursuant to 29 U.S.C. § 1145, "[e]very 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 the law, make such contributions in accordance with the terms and conditions of such plan or such agreement." 29 U.S.C. § 1145. Further, where the contract between the parties classifies unpaid contributions as trust assets, the controlling officer of the company is a fiduciary individually liable for a delinquency if he withholds contributions from the plans. NYSA-ILA Medical and Clinical Services Fund v. Catucci, 60 F.Supp.2d 194 (S.D.N.Y. 1999); LoPresti v. Terwilliger, 1216 F.3d 34, 40 (2d Cir. 1997) (finding that individual who commingled plan assets with general assets, and used plan assets to pay company creditors, rather than forwarding the assets to the plaintiff funds meant that he "exercise[d] . . . authority or control respecting . . . disposition of [plan] assets, and hence is a fiduciary for purposes of imposing personal liability under ERISA.").

Here, it is undisputed that the defendant company employed individuals who were covered by employee benefit plans and multi-employer plans maintained pursuant to the Agreement. The Agreement required the defendant company to file reports and pay contributions and deductions on behalf of covered employees in a timely manner. Plaintiffs contend in the complaint that defendants failed to remit the various required contributions and deductions from August 2003 through December 2004. Though the company, via the affidavit of defendant Gregg Grates, contests the some of the factual allegations in the complaint concerning the amount of contributions owed and the amount and type of costs and damages plaintiffs may collect herein, it does not dispute that it failed to make required contributions and deductions on behalf of employees. Thus, the defendant company has admitted liability for violating ERISA. As a further matter, the individually named defendants do not dispute allegations and proof submitted by plaintiffs concerning ...


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