The opinion of the court was delivered by: Honorable Richard J. Arcara Chief Judge United States District Court
Plaintiffs, the Buffalo Carpenters Pension Fund ("Fund") and individual trustees of the Fund (collectively "Trustees"), commenced this action pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1461, seeking to collect withdrawal liability from the defendants, Hamilton Installers, Inc. ("Installers"), Hamilton Equipment Installers, Inc. ("Equipment"), A. Jan Stalker Associates, Inc. ("Stalker Associates") and Professional Furnishings and Equipment, Inc. ("Professional"). Plaintiffs allege that defendant Installers is liable for pension contributions arising from a collective bargaining agreement between Installers and the Buffalo District Council of Carpenters Union ("Union"). Plaintiffs allege that defendants Stalker Associates, Equipment and Professional are liable for Installers' withdrawal liability because they were under "common control" with Installers or, alternatively, that they are "alter egos" of Installers.
Installers and Stalker Associates failed to answer the complaint. On January 11, 2005, this Court granted the plaintiffs' motion for default judgment against Installers and Stalker Associates. See Dkt. No. 65.
Equipment and Professional did answer the complaint and challenged the plaintiffs' theories of liability. The parties cross-moved for summary judgment. The Court granted summary judgment to defendants on plaintiffs' claims that Equipment and Professional were under "common control" with Installers, but denied summary judgment on the issue of whether Equipment or Professional were alter egos of Installers.
A bench trial was held on March 22 and 23, 2005. The parties filed proposed findings of fact and conclusions of law and in July 2005 the Court held oral argument. The following constitutes the Court's proposed findings of fact and conclusions of law pursuant to Fed. R. Civ. P. 52(a).
A. Installers - Formed 1964 - Dissolved 1994
Installers was formed in 1964 by Alfred Jan Stalker ("Jan Stalker"). Tr.*fn1 at 244-45. Jan Stalker owned 52 percent of Installers, another individual named Donald O'Connor owned the remaining 48 percent of Installers. Tr. at 248-49. Jan Stalker had another business, Stalker Associates, which he incorporated in 1968. Stalker Associates was in the business of selling furniture to laboratories, libraries, schools and hospitals. Tr. at 243-44. Installers performed the installation work for sales made by Stalker Associates. Tr. at 88. Jan Stalker bid for jobs for both product and installation. He hired workers through Installers to do the installation work.*fn2 Id.
In 1982, Jan Stalker hired his daughter, Tracie Stalker ("Tracie"), to work at Stalker Associates. Although Tracie was employed by Stalker Associates, she maintained the books and performed all of the administrative work for Installers. Tr. at 85-86. Installers did not have any assets or officers. Tr. at 86, 98. Its only customer was Stalker Associates. Tr. at 88.
In December 1992, Installers entered into a collective bargaining agreement with the Union, pursuant to which it agreed to make pension contributions to the Fund on behalf of Union employees. The collective bargaining agreement was effective from May 1993 to May 1996. See Pl. Ex. 1. Tr. at 30-31. Installers made contributions to the Fund from 1990 to 1993.*fn3 See Pl. Ex. 2. Installers hired its last laborer and made its last contribution to the Fund in November 1993, see Pl. Ex. 2, and ceased doing business in 1994. Tr. at 95-96. When it closed its doors in 1994, Installers had no assets, and had a balance of $17,500, which was transferred from Installers to Stalker Associates on the last day of Installers' fiscal year. See Tr. at 309.
B. Equipment - Formed December 1993
In December 1993, Jan Stalker incorporated a new entity--Equipment--which he co-owned with Tracie. See Pl. Ex. 15. Shortly after Installers ceased doing business, Equipment began doing all of the installation work for Stalker Associates.*fn4 In other words, Equipment replaced Installers as the entity performing the installation for Stalker Associates. There was one important difference however--Equipment hired primarily non-union workers,*fn5 whereas Installers had hired union workers.
Jan Stalker testified that he decided to dissolve Installers based upon discussions with his accountant, Anthony Cardarelli, who had expressed concerns about O'Connor's minority interest in the company. O'Connor had left Installers in the early 1970s and had not been heard from since. Tr. at 250. Nevertheless, he still owned 48 percent of Installers. Cardarelli had expressed concerns that the absence of a minority shareholder could create liability problems.
Tracie testified that Equipment was formed, in part, to avoid Installers' obligations under the collective bargaining agreement. See Tr. at 100-02.*fn6 The Court found this testimony to be credible and supported by other evidence. Most notably, after Equipment was formed and replaced Installers as the entity doing installation work for Stalker Associates, Equipment hired primarily non-union workers and (with one exception)*fn7 no further contributions were made to the Fund. Although the existence of a missing shareholder also may have factored into Jan Stalker's decision to dissolve Installers and become a co-owner of Equipment, the Court finds that this change was also motivated, in large part, by an intent to avoid Installers' obligations under the collective bargaining agreement.
After it was formed, Equipment shared an office and telephone with Stalker Associates, just as Installers had done while it was in existence. See Def. Exs. 9, 19, 47; Pl. Exs. 2, 3 and 38. Tracie continued to be employed by Stalker Associates, but maintained the books and performed all of the administrative duties for Equipment, just as she had done for Installers. Tr. at 81, 84.
C. Professional - Formed December 1996
In December 1996, Tracie's brother, Gregg Stalker ("Gregg") formed Professional. Gregg is the president and sole owner of Professional and an employee of the company. Tr. at 194. His wife is the treasurer. Tr. at 194-95. Before starting his own company, Gregg worked as a sales representative for his father at Stalker Associates for about ten years. Tr. at 195.
Professional's first year of doing business was in 1997. Tr. at 196, 199. During the first year, Gregg operated Professional out of his home. Tr. at 225. In March 1998, he relocated ...