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Gary Labarbera, Thomas Gesualdi, Louis Bisignano v. United Crane and Rigging Services

March 2, 2011

GARY LABARBERA, THOMAS GESUALDI, LOUIS BISIGNANO,
ANTHONY PIROZZI, DOMINICK MARROCCO, FRANK FINKEL,
JOSEPH FERRARA, MARK HERBST, THOMAS PIALI AND
DENISE RICHARDSON, AS TRUSTEES AND FIDUCIARIES OF THE
LOCAL 282 WELFARE, PENSION, ANNUITY, JOB TRAINING, AND VACATION AND SICK LEAVE
TRUST FUNDS,
PLAINTIFFS,
v.
UNITED CRANE AND RIGGING SERVICES, INC.,
DEFENDANT.
GARY LABARBERA, THOMAS GESUALDI, LOUIS BISIGNANO, ANTHONY PIROZZI,
DOMINICK MARROCCO, FRANK FINKEL, JOSEPH FERRARA, MARK HERBST,
THOMAS PIALI AND DENISE RICHARDSON, AS TRUSTEES AND FIDUCIARIES OF THE
LOCAL 282 PENSION TRUST FUND,
PLAINTIFFS,
v.
MARIAN DOUGLAS SMITH,
DEFENDANT.



The opinion of the court was delivered by: Dora L. Irizarry United States District Judge

OPINION AND ORDER ADOPTING IN PART AND MODIFYING IN PART REPORT AND RECOMMENDATION

DORA L. IRIZARRY, United States District Judge:

Plaintiffs, trustees and fiduciaries of the Local 282 Pension Trust Fund, brought these actions against United Crane and Rigging Services ("United") and Marian Douglas Smith, seeking to obtain ERISA damages. Smith owned and was the sole principal of non-parties Unique Rigging Corp. and Unique Warehousing Corporation (collectively "Unique"). Smith also owns the property that was Unique Rigging's principal place of business (the "Property").

In 2001, Plaintiffs brought an action against Unique Rigging for unpaid contributions. Plaintiffs obtained a judgment, but have not been successful in enforcing the judgment. In 2007, Unique Rigging again stopped making the appropriate contributions, and filed for bankruptcy protection. During the pendency of the bankruptcy proceedings, United was formed and began operating on the Property.

In the complaint against United, Plaintiffs, on a theory of successor liability, attempt to enforce a 2006 judgment obtained against Unique for unpaid ERISA contributions. In the complaint against Smith, Plaintiffs allege that, pursuant to 29 U.S.C. § 1302(b)(1), Smith is jointly and severally liable for Unique's more recent 2007 withdrawal from the fund.

On December 4, 2009, in the action against United, Plaintiffs filed a motion for summary judgment. (Docket Entry 16, in 08-CV-3274.) On January 15, 2010, in the action against Smith, the parties filed cross-motions for summary judgment. (Docket Entries 13, 14, in 08-CV-3983.) On June 23, 2010, the court referred the motions to the Hon. Andrew L. Carter, U.S.M.J. On September 10, 2010, Judge Carter issued a Report and Recommendation ("R&R") wherein he recommended that the court: (1) deny plaintiff's motion for summary judgment against United for lack of standing; (2) order the parties in the United action to show cause why the case should not be dismissed for lack of subject matter jurisdiction; and (3) deny the cross-motions in the action between Smith and Plaintiffs because there is an issue of fact regarding whether Smith received notice of Plaintiffs' intention to hold him liable for withdrawal liability.

Plaintiffs object to the magistrate judge's recommendations and argue that: (1) Plaintiffs have standing to assert successorship and alter ego claims; (2) the court properly has subject matter jurisdiction over the claims against United; and (3) Plaintiffs properly provided Smith with notice of Plaintiffs' withdrawal liability claim. (Plaintiffs' Objections to the R&R, Docket Entry 25 in 08-CV-3274, and Docket Entry 24 in 08-CV-3983 ("Pl. Obj.").) Plaintiffs therefore contend that summary judgment should be granted in their favor against both United and Smith. Defendants have submitted a response to Plaintiffs objections, and argue that the magistrate judge's conclusions were correct. (Response to Plaintiffs' Objections, Docket Entry 26 in 08-CV-3274, and Docket Entry 25 in 08-CV-3983 ("Def. Resp.").)

Subsequent to the filing of objections in these cases, Richard E. O'Connell, Chapter 7 trustee for Unique in a case pending in the United States Bankruptcy Court for the Eastern District of New York, made a motion to intervene in the action against United. (Docket Entries 28, 34.) The trustee argues that it seeks to intervene to protect "his right to release claims asserted by the Trustees and Fiduciaries of the Local 282 Funds" against United. (Docket Entry 28, at 1.) United opposes the motion to intervene as untimely and without basis.

For the reasons set forth below, the Report and Recommendation is modified in part and adopted in part. Furthermore, the motion to intervene is denied as moot.

DISCUSSION

A.Standard of Review

When no objections to an R&R are made, the court may adopt the R&R if "there is no clear error on the face of the record." Adee Motor Cars, LLC v. Amato, 388 F. Supp. 2d 250, 253 (S.D.N.Y. 2005) (citation omitted). "The clearly-erroneous standard also applies if a party makes only conclusory or general objections, or simply reiterates his original arguments." United States v. Preston, 635 F. Supp. 2d 267, 269 (W.D.N.Y. 2009) (citation and internal quotation marks omitted). When specific objections are made, a district judge must make a de novo determination with respect to those parts of the R&R to which the party objects. The district court may then "accept, reject, or modify the recommended decision, receive further evidence, or recommit the matter to the magistrate judge with instructions." FED. R. CIV. P. 72(b); 28 U.S.C. § 636(b); see also United States v. Raddatz,447 U.S. 667, 673--76 (1980).

B.Claim Against Defendant Smith

Plaintiffs are seeking from Smith, as the sole proprietor of a real estate leasing business in common control with Unique, payment of $340,485 in withdrawal liability incurred by Unique in 2007. The two issues raised in the parties' summary judgment motions were whether Smith is an employer under ERISA and, if so, whether Smith received the required statutory notice of withdrawal liability. In the R&R, the magistrate judge concluded that Smith should be considered an employer for the purposes of withdrawal liability. (R&R at 16-18.) Smith was the sole owner of Unique and of the property Unique used, and he and Unique therefore constitute a trade or business under common control for withdrawal liability purposes. There have been no objections to this finding, and the court concurs with this finding.

The magistrate judge further recommended denying Plaintiffs' motion for summary judgment because there was an issue of fact regarding whether Smith received the required notice. Plaintiffs object to this conclusion. The court therefore reviews this claim de novo.

The MPPAA provides a comprehensive statutory scheme governing withdrawal from multiemployer pension plans. When an employer withdraws from a plan, the plan sponsor must determine the amount of liability and notify the employer of the amount "as soon as practicable" after withdrawal. See 29 U.S.C. §§ 1382, 1399(b)(1). "The MPPAA does not specify the form that this notification is to take, or mandate a particular template that it must conform to." Amalgamated Lithographers of America v. Unz & Co. Inc., 670 F. Supp. 2d 214, 224-25 (S.D.N.Y 2009). "All that is required is that the plan gives the employer the necessary information," which includes the amount of liability and the schedule for payment, and demand payment in accordance with the schedule. Id. at 225. Where, as here, the entities are under common control for the purposes of withdrawal liability, "‗[n]notice to one member of the control group is considered as notice to all members.'" Id. (quoting Trs. of Amalgamated Ins. Fund v. Saltz, 760 F. Supp. 55, 58 (S.D.N.Y. 1991)).

Plaintiffs claim that they mailed the Notice of Default and Withdrawal Liability Letter to the Property, and they contend that it was received by United, the occupant of the Property at the time. Plaintiffs argue that, because United and Smith are part of the same control group, notice to United is sufficient notice to Smith. To support their assertion that United received the notice, Plaintiffs provided two unsigned letters, dated June 26, 2008 and July 3, 2008, and a return receipt, dated July 7, 2008 and signed by "T. Bowen." Smith and United both deny receipt of the letters or knowledge of the person who signed the one return receipt. As the magistrate ...


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