United States District Court, N.D. New York
JEFFREY S. SWYERS, ESQ., PAUL E. KNUPP, ESQ., SLEVIN & HART, P.C., Washington, D.C., Counsel for Plaintiffs.
GLENN E. PEZZULO, ESQ., CULLEY, MARKS, TANENBAUM & PEZZULO, LLP, Rochester, New York, Counsel for Defendant.
GLENN T. SUDDABY, District Judge.
On April 7, 2013, the Court conducted a bench trial in the above-captioned action filed by the UFCW Local One Pension Fund and its Trustees ("Plaintiffs") against Enivel Properties, LLC ("Defendant") pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"). At the end of the trial, the Court reserved decision, permitted the filing of post-trial briefs by June 5, 2014. After carefully considering the matter, the Court finds in favor of Defendant on Plaintiff's claim, and directs the Clerk of the Court to enter judgment for Defendant. The following constitutes the Court's findings of fact and conclusions of law in support of its verdict.
I. RELEVANT BACKGROUND
A. Plaintiffs' Complaint
Generally, liberally construed, Plaintiffs' Complaint alleges as follows. (Dkt. No. 1.) On or about November 17, 2007, Empire Beef Co., Inc. ("Empire"), a New York corporation and employer, withdrew from the United Food and Commercial Workers Local One Pension Fund (the "Fund"). ( Id. ) As a result of its withdrawal, Empire incurred a withdrawal liability assessment to the Fund in the amount of $1, 235, 644.00, under ERISA. ( Id. ) Because Enivel Properties, LLC ("Enivel") is another trade or business under common control with Empire, Enivel is jointly and severally liable for this withdrawal liability assessment. ( Id. ) As a result, Plaintiffs seek a judgment against Enivel, awarding Plaintiffs the withdrawal liability assessment, as well as interest, liquidated damages, and fees and costs incurred by the Fund to collect that assessment. ( Id. ) Familiarity with the factual allegations supporting this claim in Plaintiffs' Complaint is assumed in this Decision and Order, which is intended primarily for the review of the parties. ( Id. )
B. Issue for Trial
In their pre-trial stipulations of fact, pre-trial briefs, and post-trial briefs, the parties identify the main, if not sole, legal issue at trial as whether Enivel was a "trade or business" under the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1381-1453 (Dkt. No. 40, at 8 [Pre-Trial Stips. of Fact]; Dkt. No. 38 [Def.'s Pre-Trial Brief]; Dkt. No. 41 [Plfs.' Pre-Trial Brief]; Dkt. No. 54 [Plfs.' Post-Trial Brief]; Dkt. No. 53 [Def.'s Post-Trial Brief].)
C. Facts Established at Trial
Before trial, the parties jointly submitted pretrial stipulations of fact. (Dkt. No. 40 [Pre-Trial Stips. of Fact].) At trial, the testimony of Lori A. Levine was adduced. (Dkt. No. 52 [Tr. Trans.].) In addition, the following 17 exhibits were admitted into evidence: (1) Enivel's Operating Agreement, effective May 27, 2003; (2) Enivel's Articles of Organization, filed May 27, 2003; (3) Enivel's Employer Identification Number, issued June 9, 2003; (4) Enivel's income tax returns for 2007; (5) a letter from the Fund to Steven Levine dated January 24, 2008, regarding Empire's withdrawal liability assessment; (6) a letter from Bonadio & Co., LLP to Enivel dated April 5, 2008; (7) a letter from the Fund to Steven Levine dated April 24, 2008, regarding Empire's withdrawal liability assessment; (8) a letter from the Fund to Steven Levine dated July 24, 2008, regarding Empire's withdrawal liability assessment; (9) a Consent Judgment and Order dated September 13, 2011, regarding Empire; (10) a Collective Bargaining Agreement between Empire and United Food and Commercial Workers International Union, effective January 19, 2006; (11) the Fund's Withdrawal Liability Rules, dated March 2005, with subsequent amendments; (12) the Fund's Policy for Collection of Delinquent Contributions, dated December 10, 2002; (13) an excerpt from the New York State Commercial Association of Realtors website, regarding Lori Levine; (14) another excerpt from the New York State Commercial Association of Realtors website, regarding Lori Levine; (15) an excerpt from Showcase.com, regarding five of Lori Levine's real property listings; (16) another excerpt from Showcase.com, regarding Lori Levine's Mildahn Road property listing; and (17) another excerpt from Showcase.com, regarding Lori Levine's Ogden Center Road property listing. (Tr. Exs. P-1, P-2, P-3, P-4, P-5, P-6, P-7, P-8, P-10, P-11, P-12, P-13, P-17, P-18, P-19, P-20, P-21, and D-1.) Generally, based on this evidence, the following facts have been established.
1. Empire Beef Co., Inc.
The Fund is a joint labor-management pension fund, which provides retirement and related benefits to the eligible employees of employers who contribute to the Fund pursuant to various collective bargaining agreements with the United Food and Commercial Workers District Union Local One. Until the date of its withdrawal from the Fund in 2007, Empire contributed to the Fund on behalf of its employees covered by a Collective Bargaining Agreement.
On or about November 17, 2007, Empire effected a "complete withdrawal" from the Fund pursuant to ERISA Section 4203(a), 29 U.S.C. § 1383(a). As a result, Empire incurred a withdrawal liability assessment in the amount of $1, 235, 644.00. As of the date of withdrawal, Steven Levine owned 100% of the stock of Empire Beef.
By letter dated January 24, 2008, the Fund sent Empire a Notice and Demand for payment of the withdrawal liability assessment. The Notice and Demand stated that "the withdrawal liability is owed by Empire Beef Company and all trades or businesses under common control." However, Empire did not make the first installment payment due on April 1, 2008. By letter dated April 24, 2008, the Fund notified Empire that, if payment was not received within 60 days from the date of the letter, Empire would be in default as defined by Section 4219(c)(5)(A) of ERISA, 29 U.S.C. § 1399(c)(5)(A). Nonetheless, Empire failed to make any payment. By letter dated July 24, 2008, the Fund notified Empire that it was in default.
Neither Empire nor Enivel initiated arbitration of the withdrawal liability assessment within the time period specified in Section 4221(a)(1) of ERISA, 29 U.S.C. § 1401(a)(1) or at any point thereafter. The Fund filed suit against Empire on February 6, 2009. On September 13, 2011, the Court entered judgment against Empire in the amount of $1, 790, 343.90, which included the withdrawal liability assessment, interest, liquidated damages, attorneys' fees, and costs. Empire has failed to pay any amounts to the Fund.
2. Enivel Properties, LLC
Enivel is a limited liability company that was formed on May 27, 2003. At the time of formation (and continuing until 2008), Steven Levine held 40% of the stock of Enivel, and Lori Levine held 60% of the stock of Enivel. In 2007 or 2008, Steven Levine gifted his shares to his and Lori Levine's children (following his divorce from Ms. Levine). (Dkt. No. 52, at 5, 12, 14-16, 32 [Tr. Trans.].)
The purpose of Enivel was to serve as a holding company for Steven and Lori Levine's real estate investments. (Dkt. No. 40, at ¶¶ 11-12 [Pre-Trial Stips. of Fact]; Dkt. No. 52, at 11, 14, 16-17, 21, 42 [Tr. Trans.].) More specifically, Enivel's purpose was to buy properties at one price and later sell them at a higher price, in order to realize a profit. (Dkt. No. 40, at ¶ 12 [Pre-Trial Stips. of Fact]; Dkt. No. 52, at 11 [Tr. Trans.]; cf. Tr. Ex. P-1.) The reason Enivel was formed as a limited liability company was to protect the Levines from legal liability in case somebody was injured on one of their properties. (Dkt. No. 52, at 16-17, 21 [Tr. Trans.].)
Enivel's Manager, Lori Levine, has been responsible for its business operations. Apart from performing work for Enivel, Ms. Levine has performed work for Enivel Commercial Realty, a separate entity. (Dkt. No. 52, at 4-5, 9-10 [Tr. ...