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Ferrara v. Oakfield Leasing Inc.

United States District Court, E.D. New York

November 9, 2012

Joseph A. FERRARA, Sr., Frank H. Finkel, Marc Herbst, Denise Richardson, Anthony D'Aquila, Thomas F. Corbett, Thomas Gesualdi, Louis Bisignano, Dominick Marrocco, and Anthony Pirozzi, as Trustees and Fiduciaries of the Local 282Welfare Trust Fund, the Local 282 Pension Trust Fund, the Local 282Annuity Trust Fund, the Local 282 Job Training Trust Fund, and the Local 282Vacation and Sick Leave Trust Fund, Plaintiffs,
OAKFIELD LEASING INC., Coral Industries Inc., and Michael N. Babino, Jr., Defendants.

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Cohen, Weiss and Simon LLP, by: Peter DeChiara, Esq., Zachary N. Leeds, Esq., of Counsel, New York, NY, for Plaintiffs.

The Ziskin Law Firm, LLP, by: Richard B. Ziskin, Esq., of Counsel, Commack, NY, for Defendant Oakfield Leasing, Inc.

Dandeneau & Lott, by: Gerald V. Dandeneau, Esq., of Counsel, Melville, NY, for Defendants Coral Industries and Michael N. Babino, Jr.


SPATT, District Judge.

The Plaintiffs commenced this action on January 27, 2011, seeking to recover from

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the Defendants, jointly and severally, unpaid contributions owed to the Plaintiff Funds, pursuant to Sections 502(a)(3) and 515 of the Employee Retirement Income Security Act of 1974 (" ERISA" ), as amended, 29 U.S.C. §§ 1132(a)(3) and 1145. Presently before the Court is the Plaintiffs' motion for summary judgment, which is opposed by two of the three defendants— Coral Industries Inc. (" Coral" ) and Michael N. Babino Jr. (" Michael Jr." ). For the reasons set forth below, the motion is granted as to liability, but the request for damages is granted in part and denied in part.


The Plaintiffs, Joseph A. Ferrara, Sr., Frank H. Finkel, Marc Herbst, Denise Richardson, Anthony D'Aquila, Thomas F. Corbett, Thomas Gesualdi, Louis Bisignano, Dominick Marrocco, and Anthony Pirozzi (the " Trustees" ), are trustees and fiduciaries of the Local 282 Welfare Trust Fund, the Local 282 Pension Trust Fund, the Local 282 Annuity Trust, the Local 282 Job Training Trust Fund, and the Local 282 Vacation and Sick Leave Trust Fund (the " Funds" ). The Funds are employee benefit plans created pursuant to collective bargaining agreements (" CBAs" ) between Building Material Teamsters Local 282, I.B.T. (the " Union" ) and various employers. The Funds are jointly administered by a Board of Trustees, comprised of both Union-appointed and employer-appointed members. The Funds provide welfare, pension, annuity, job training, and vacation and sick leave benefits to employees that perform work covered by the CBAs. The Funds are governed by the Funds' Restate Agreement and Declaration of Trust (the " Trust Agreement" ), which in turn is incorporated by reference in the CBAs.

Under the terms of the CBAs, the employers are required to contribute to the Funds for hours worked by their employees at rates that are specified in the CBAs. The Trust Agreement specifically requires such employers to submit remittance reports to the Funds that reflect the number of hours worked by their employees in covered employment and the corresponding contributions. In order to verify the accuracy of these remittance reports, the Funds conduct regular audits of employers, and may conduct an audit " at any time" pursuant to the Trust Agreement. (Cody Decl., ¶¶ 16-17.) The Trust Agreement also states that in the event an employer is delinquent in making its contributions, the employer is then liable for: (1) the delinquent contributions; (2) interest on the delinquent contributions from the first day of the month for which contributions were due to the date when payment is made; (3) liquidated damages equal to the greater of (i) the amount of interest due, or (ii) twenty percent of the delinquent contributions; (4) audit fees; and (5) attorney's fees and costs.

Beginning on July 7, 1995, the Defendant Oakfield Leasing Inc. (" Oakfield" ) has been a signatory to a series of CBAs with the Union. From June 1, 2006 through June 30, 2009, and from July 1, 2009 through June 30, 2012, Oakfield was bound to the terms of a CBA known as the Metropolitan Trucker's Association and Independent Trucker's Contract (the " MTA CBA" ). While Oakfield did not sign the MTA CBA, there is no dispute that it adopted the CBA by its conduct and thus is bound by it. In this regard, Oakfield signed and submitted remittance reports to the Plaintiff Funds that stated " MTA" or " Metropolitan Trucker's Ass'n" on them. In addition, Oakfield contributed to the Funds at the rates set forth in the MTA CBA, and increased its contributions in accordance with that agreement. In this regard, the remittance reports stated

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According to the Plaintiffs, they sought to audit Oakfield for the period beginning on October 1, 2008, including access to the books and records of the Defendant Coral Industries Inc. (" Coral" ), because Coral was an entity affiliated with Oakfield. However, the Funds claim that Oakfield failed to submit to the requested audits. (Pl.'s Rule 56.1 Stmt., ¶¶ 19-20.) On the other hand, the Defendants deny that Oakfield ever received an audit request, and assert that no documentation exists to support the Plaintiff's claim that Oakfield failed to submit to an audit.

If an employer refuses to submit to an audit— as the Plaintiffs contend that Oakfield did— the Trustee has the power to estimate the amount of contributions owed based upon formulas contained in the Trust Agreement. This is precisely what the Plaintiffs did in the present case. The Plaintiffs now claim that in performing an estimated audit and applying the relevant formulas, Oakfield owes: (1) $336,751.49 in delinquent contributions; (2) $78,600.14 in interest for the period from October 2008 through October 2011, as well as $166.07 per diem interest, accruing since December 16, 2011; (3) liquidated damages equal to the interest owed; and (4) $350 for audit costs. The Defendants do not deny that they owe the above mentioned amounts, but rather deny liability only on the ground that they have not been supplied with documents supporting the audit and estimations.

Philomena Babino was the owner of Oakfield since its incorporation in 1991. She died on May 13, 2010. Since her death, Michael P. Babino Sr. (" Michael Sr." ), her husband, has taken over her ownership interest. The Plaintiffs assert that Philomena's son, the Defendant Michael N. Babino Jr. (" Michael Jr." ), was previously an employee of Oakfield (Pl.'s Ex. A. at 29-30), but the Defendants deny this fact. (Babino, Jr. Decl., ¶ 3; Def.'s Ex. B at 24.) Notwithstanding this apparent factual dispute, the Defendants admit that Michael Jr. has been employed as a driver by Oakfield. (Pl.'s Rule 56.1 Stmt., ¶ 87.) Regardless, there is no dispute that Michael Jr. established Coral Industries Inc. (" Coral" ) in 1995. He currently owns the company and has been its only shareholder. It is undisputed that Coral has never been a signatory to any CBA with any labor organization.

Oakfield's address is, and at all times has been, 752 Oakfield Avenue, North Bellmore, New York 11710. This house is owned by Michael Sr., the father of the Defendant Michael Jr. Coral's certificate of incorporation lists the same address with the New York Secretary of State for purposes of service of process.

Both companies are in the business of providing trucking services to customers. In particular, both companies operate dump trucks to truck away construction debris or excavated materials from its customers' construction sites. (Pl.'s Ex. B at 23-24; Pl.'s Ex. C at 94.) Oakfield and Coral have rented property at 1351 Newbridge Road, Bellmore, N.Y. The companies share customers, such as Asplundh Construction (" Asplundh" ) and Network Infrastructure (" Network" ). (Pl.'s Rule 56.1 Stmt., ¶ 71-72.) In fact, the only customers Coral has ever had are Asplundh and Network.

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Oakfield and Coral utilize dump trucks, which are designated by a number that is painted on the truck. Oakfield and Coral both used Truck # 11, registered to Coral, to provide services to Asplundh. (Pl.'s Rule 56.1 Stmt., ¶ 77.) Coral invoiced Asplundh for the services that Truck # 11 provided on June 1, 2009, and Oakfield invoiced Asplundh for the services that Truck # 11 provided on June 8, 2009. ( Id. ) Similarly, on October 21, 2009, Oakfield used Truck # 10 to provide services to Network at a location in Woodmere, New York, while Coral used the same truck to provide services to the same client in Woodmere, New York on the very next day. (Pl.'s Rule 56.1 Stmt., ¶¶ 81-82.) The two companies' invoices both utilized the typography of an initial small letter with the balance of the letters in capitals, such as " wOODMERE" or " rOCKAWAYS" . A number of individuals, such as Joseph Mollin, Anthony Bassolino, David Hernandez, and Thomas Pelligrino, have been employed as drivers for both companies. On occasions, drivers employed by Oakfield drove trucks owned by Coral. Further, on occasions when Joseph Mollin drove for Oakfield, that company paid his wages, although he was an employee of Coral. (Pl.Ex. C at 140-41.) The Defendant Michael Jr. also performed driving services for Oakfield while driving a truck registered to Coral.

There are further undisputed instances of employees of one company performing driving services for the other company; employees of one company utilizing the trucks registered to the other company; and employees of one company being paid wages by the other company. (Pl.'s Rule 56.1 Stmt., ¶¶ 92-100.) It was not unusual for Oakfield to use Coral's trucks, and for Coral to use trucks that were registered to Oakfield. In these instances, neither company paid the other for use of the trucks, and no written agreement exists between the companies. Also, Phillip Peterson has served as the accountant for both Oakfield and Coral.

There is no dispute that Coral has never issued any stock. In addition, Michael Jr. stated at his deposition that Coral has no directors or officers. The Defendants dispute this fact, but their citation to Michael Jr.'s declaration is unrelated to the issue and thus does not support their contention. When asked at his deposition if he saw a difference between himself and Coral, Michael Jr. answered " No."

Michael Jr. received money from Coral over the years, in no particular schedule or pattern. There was no formula to determine how much money he would take from the company. Michael Jr. caused Coral to pay his house bills, including personal electric bills and telephone bills, on a regular basis. He likewise caused Coral to pay his daughter's school tuition, personal shopping expenses, and home renovation costs. Michael Jr. also caused Coral to make payments to his parents, because his parents had loaned him money to purchase his house and to assist with his divorce settlement. Thus, Michael Jr. used money from Coral to pay the debt to his parents. For instance, on August 22, 2005, Michael Jr. wrote a check on Coral's account payable to his mother, Philomena, in the amount of $602.85; on November 3, 2005, he wrote a check on Coral's account payable to Philomena in the amount of $1,500; and on December 31, he wrote a check on Coral's account payable to Philomena in the amount of $6,300. Checks of this nature were written from Michael Jr. to Philomena on Coral's account payable from August 2005 through December 2009.

The Plaintiffs commenced this action on January 27, 2011, seeking to recover from the Defendants, jointly and severally, unpaid contributions owed to the Funds,

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along with interest, liquidated damages, audit fees, attorney's fees and costs. In the initial complaint, the Funds stated their intention to hold not only Oakfield and Coral jointly and severally liable based upon their " single employee" relationship, but also to hold Michael Jr. and the now deceased Philomena Babino, jointly and severally liable with the corporate defendants based upon their " knowing[ ] ... control over the Corporate Defendants in an ongoing scheme to defraud the Funds of contributions." (Compl., ¶ 3.) The Plaintiffs brought causes of action (1) against Oakfield for liability under the CBA; (2) against Coral based on its single employer relationship with Oakfield; (3) against Oakfield and Coral based on unpaid contributions for hours worked by Coral's drivers; (4) against the individual defendants based on their alleged scheme to defraud the funds; and (5) against Oakfield and Coral based on their failure to submit to an audit under the Trust Agreement.

The Plaintiffs now move for summary judgment pursuant to Federal Rule of Civil Procedure (" Fed. R. Civ. P." ) 56. According to the Funds, the corporate defendants are jointly and severally liable for delinquent benefit contributions plus interest, liquidated damages, attorney's fees and costs, by virtue of their single employer relationship. Further, the Plaintiffs assert that this Court should pierce the corporate veil so that the individual defendant, Michael Babino Jr. should be held personally liable jointly and severally for the damages. Only the Defendant Michael Babino and Coral, his corporation, have responded to the Funds' motion, arguing not that there are sufficient issues of material fact to warrant denial of summary judgment, but rather that there is no basis for liability against them and that the complaint should be dismissed. Oakfield did not file an opposition to the motion.


A. Legal Standard on a Motion for Summary Judgment

It is well-settled that summary judgment under the provisions of Fed.R.Civ.P. 56(c) is proper only " if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A fact is " material" within the meaning of Fed.R.Civ.P. 56 when its resolution " might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue is " genuine" when " the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.

In determining whether an issue is genuine, " [t]he inferences to be drawn from the underlying affidavits, exhibits, interrogatory answers, and depositions must be viewed in the light most favorable to the party opposing the motion." Cronin v. Aetna Life Ins. Co., 46 F.3d 196, 202 (2d Cir.1995) (citing United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962) (per curiam), and Ramseur v. Chase Manhattan Bank, 865 F.2d 460, 465 (2d Cir.1989)). Once the moving party has met its burden, " the nonmoving party must come forward with ‘ specific facts showing that there is a genuine issue for trial.’ " Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting Fed.R.Civ.P. 56(e)). However, the nonmoving party cannot survive summary judgment by casting mere " metaphysical doubt" upon the evidence produced

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by the moving party. Matsushita, 475 U.S. at 586, 106 S.Ct. 1348. Summary judgment is appropriate when the moving party can show that " little or no evidence may be found in support of the nonmoving party's case." Gallo v. Prudential Residential Servs., 22 F.3d 1219, 1223-24 (2d Cir.1994) (citations omitted).

B. As to the Recovery of the Delinquent Contributions Owed by Oakfield

With regard to the first cause of action in the Complaint, the Plaintiffs contend that Oakfield is liable for the amount determined in the estimated audit, namely $336,751.49, in addition to interest, liquidated damages, attorney's fees, and audit costs. The Defendant Oakfield does not oppose the summary judgment motion. Nevertheless, " even unopposed motions for summary judgment must fail where the undisputed facts fail to show that the moving party is entitled to judgment as a matter of law." D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 110 (2d Cir.2006). Thus, the Court must consider whether the Plaintiffs have met their burden for obtaining summary judgment.

First, the Court must determine whether Oakfield is liable for violating section 515 of ERISA, 29 U.S.C. § 1145. Section 515 provides:

Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.

29 U.S.C. § 1145; Greenblatt v. Delta Plumbing & Heating Corp., 68 F.3d 561, 568 (2d Cir.1995).

In this case, Oakfield does not contest that it is liable for contributions pursuant to the terms of the CBAs. Oakfield does not raise any defenses to the validity of the CBAs or claim that the Funds are seeking contributions for work that is not covered. Moreover, the undisputed facts demonstrate that Oakfield employs Union members as defined by ERISA; the Plaintiffs are trustees and fiduciaries of the Funds, which are multiemployer plans, as defined by ERISA; and Oakfield, by its conduct, agreed to the terms of the CBAs that require employers to remit contributions to these plans. Yet, Oakfield failed to remit contributions for the period from October 1, 2008 through September 30, 2009. Thus, the failure of Oakfield to remit contributions to the Plaintiffs violates ERISA.

ERISA enumerates the type of relief that may be awarded for a violation of section 515. In particular, 29 U.S.C. § 1132(g)(2) provides:

In any action under this subchapter by a fiduciary for or on behalf of a plan to enforce section [515] of this title in which a judgment in favor of the plan is awarded, the court shall award the plan—
(A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of-
(i) interest on the unpaid ...

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