United States District Court, S.D. New York
DEMOS P. DEMOPOULOS, et al., Plaintiffs,
ANCHOR TANK LINES, LLC, et al., Defendants.
OPINION & ORDER
LORNA G. SCHOFIELD, District Judge.
This is the latest in what is now an eight-year saga of lawsuits. Plaintiffs, who are trustees and fiduciaries of various employer contribution funds governed by the Employment Retirement Income Security Act of 1974, as amended by the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. § 1132, et seq., ("ERISA") seek damages from Defendants Anchor Tank Lines LLC, Tank Acquisition Company LLC, Leonard Baldari, Robert Baldari and Michael David Hiller in connection with payments that were required but not made to International Brotherhood of Teamsters Local 553's ("Local 553") benefit funds. Plaintiffs also seek to enforce judgments Plaintiffs have been awarded in the past. Defendants move to dismiss. For the reasons that follow the motions are granted, and the Complaint is dismissed.
The following is based on allegations in the operative Amended Complaint (the "Complaint"), documents attached to or integral to the Complaint, and facts of which the Court is permitted to take judicial notice. As required for the present motion, all factual allegations in the Complaint are assumed to be true.
A. The Parties
Plaintiffs are the trustees and fiduciaries (the "Trustees") of the Local 553 Benefit Fund, the Local 553 Pension Fund and the Local 553 Deferred Compensation Fund (the "Funds"). The Funds are multi-employer employee benefit plans governed by ERISA. The Funds collect and receive contributions and provide benefits to eligible participants pursuant to agreements between Local 553 and the participants' employers.
This case arises out of the failure of two non-parties to make payments to the Funds between 2007 and 2009. The two non-parties are Anchor Tank Lines Corp. ("Anchor I"), known until August 2008 as Mystic Tank Lines Corp., and Reliable Transit Corp. ("Reliable), known until September 2007 as Anchor Transit Corp. Reliable was a wholly owned subsidiary of Anchor I. Anchor I and Reliable were in the business of transporting "oil and other products" in and around New York City, and operated out of 19-01 Steinway Street, Queens, New York.
Anchor I and Reliable employed Local 553 members and were required to make monthly contributions to the Funds pursuant to collective bargaining agreements with Local 553. Reliable was also obligated to pay withdrawal liability to one of the Funds for its proportionate share of the Fund's unfunded vested benefits. According to the Complaint, Defendants Leonard Baldari, Robert Baldari and Michael David Hiller ("Hiller") (collectively, the "Individual Defendants") "were the principal owners and/or executives of Anchor I and Reliable, which were closely held entities." The Individual Defendants controlled whether and to what extent Anchor I and Reliable contributed to the Funds.
On July 12, 2007, Defendants Leonard Baldari and Hiller were indicted in the United States District Court for the Eastern District of New York. The indictment charged that Leonard Baldari and Hiller used Anchor I, Reliable and other entities to embezzle interstate shipments of oil products and conspired to launder money. The Indictment was unsealed on July 19, 2007. See United States of America v. Leonard Baldari, No. 07 Cr. 568 (E.D.N.Y.) (" U.S. v. Baldari "), Dkt. No. 4. The Indictment identifies Leonard Baldari as the majority shareholder of Anchor I and a 50% owner of Reliable, and Hiller as the Chief Financial Officer of Anchor I and the president and 50% owner of Reliable. U.S. v. Baldari, Dkt. No. 1, ¶¶ 6-7. The Indictment alleges that, upon the conviction of Leonard Baldari and Hiller, the Government would seek forfeiture of property including:
"A sum of money equal to at least approximately $50, 000, 000 in United States currency for which [Leonard Baldari and Hiller] are jointly and severally liable";
"All right, title and interest of [Leonard Baldari and Hiller] in [Anchor I], and all the proceeds traceable thereto"; and
"All right, title and interest of [Leonard Baldari and Hiller] in [Reliable], and all the proceeds traceable thereto." Id. at ¶¶ 21(d)-(e), 23(d)-(e).
The criminal case remains open, and neither a criminal forfeiture order nor any judgment of conviction appears on the docket.
Defendants Anchor Tank Lines LLC ("Anchor II") and Tank Acquisition Company LLC ("Tank") (collectively, the "Tank Defendants") are sued in the present action as successors to Anchor I and Reliable. The Tank Defendants were formed in December 2010 to acquire the assets of Anchor I and/or Reliable after they were forfeited to the Government. In March 2011, the Tank Defendants purchased almost all of Anchor I's assets. Like Anchor I and Reliable before them, the Tank Defendants' principal place of business is 19-01 Steinway Street in Queens, New York, and their business is the transport of "oil and other products" in and around New York City. The Complaint alleges a "complete continuity of operations" between Anchor I and Reliable on the one hand, and the Tank Defendants as their successors. The Tank Defendants are owned by non-parties to this action. Defendants Leonard and Robert Baldari are now full time employees of the Tank Defendants.
B. Litigation by the Trustees on Behalf of the Funds
1. Demopoulos v. Mystic Tank Lines Corp. [i.e., Anchor I], 07 Civ. 9451
On October 27, 2007, approximately three months after Baldari and Hiller's indictment, the Trustees commenced an action against Anchor I in this Court to recover unpaid contributions to the Funds. See Demopoulos v. Mytic Tank Lines Corp., 07 Civ. 9451 (S.D.N.Y.) (" Demopoulos I "), Dkt. No. 1. Demopoulos I named only Anchor I as defendant and sought to recover unpaid Fund contributions for the period June 1, 2007, to August 31, 2007. Id. at ¶ 9.
On December 6, 2008, the parties in Demopoulos I and Leonard Baldari (who was not a defendant in the action) entered into a settlement agreement, which Judge Denny Chin "so ordered" and entered on the docket on January 8, 2009. Id., Dkt. No. 47. The agreement recited that "[Anchor I], the Trustees and Leonard Baldari are desirous of resolving the disputes and disagreements that exist between them." The settlement obligated Anchor I to make future payments to the Funds and pay $584, 524.42 plus 8% interest, and provided that "Leonard Baldari, Owner of [Anchor I] hereby undertakes to personally guarantee the liability of [Anchor I]... in the amount of $650, 000." Id., Dkt. No. 47 at ¶¶ 3, 6. The agreement also provided that if Anchor I sold its stock or "substantially all of [its] assets, " the "purchaser or transferee of the stock or assets will be liable for all of the obligations of [Anchor I.]" Id., Dkt. No. 47 at ¶ 17. In a separate personal guaranty, Leonard Baldari warranted that there was "no action, claim, suit or proceeding... pending or threatened against or affecting the Guarantor or any of Guarantor's properties before any court... which could or might result in any material adverse change [to] the Guarantor." On March 13, 2009, Judge Chin "so ordered" an amendment to the parties' settlement, which added attorneys' fees to the amount owed by Anchor I and reflected that Anchor I's name had changed (from Mystic to Anchor I). Under the terms of the amended settlement, Anchor I agreed to pay a total of $625, 944.79 plus pre-judgment interest. Id., Dkt. No. 47.
Anchor I paid $90, 196.55 before it defaulted and was sold. On September 15, 2010, judgment was entered to enforce the settlement, adding Baldari as an additional defendant, and ordering payment of $866, 238.35, of which $559, 803.45 was the unpaid portion of Baldari's guarantee. Id., Dkt. No. 56. A virtually identical judgment updating the interest due was entered on the docket on February 8, 2011, for $966.727.83. Id., Dkt. No. 57. This amount remains outstanding.
2. Demopoulos v. Anchor Transit Corp. [i.e., Reliable], 08 Civ. 5860
On June 30, 2008, almost one year after Baldari and Hiller's indictment, the Trustees commenced a separate action in this Court against Reliable as the sole defendant to recover unpaid contributions to the Funds. See Demopoulos v. Anchor Transit Corp., No. 08 Civ. 5860 (S.D.N.Y.) (" Demopoulos II "), Dkt. No. 1. On February 28, 2009, the parties in Demopoulos II stipulated to a consent judgment, covering unpaid contributions for the period February 1, 2007 to January 31, 2009, which Judge Victor Marrero "so ordered" and entered on the docket on March 18, 2009. Demopoulos II, Dkt. No. 21. Robert Baldari signed the stipulation on behalf of, and as President of, Reliable. Id., Dkt. No. 21 at 3. Under the terms of the judgment, Reliable was liable to the Trustees for $248, 073.32. Id., Dkt. No. 21. That amount remains outstanding.
3. Demopoulos v. Reliable Transit Corp., 10 Civ. 8324
In November 2009, Reliable permanently stopped contributing to the Funds. In January 2010 and again in March 2010, the Funds sent Reliable two notices informing it of the default and demanding payment for withdrawal liability under the terms of the relevant collective bargaining agreement with the Funds. Reliable failed to make any payment. On November 4, 2010, the Trustees commenced an action in this Court to recover the amount owed as withdrawal liability. See Demopoulos v. Reliable Transit Corp., No. 10 Civ. 8324 ( Demopoulos III ), Dkt. No. 1. Only Reliable was named as a defendant, and it did not appear in the action. On February 1, 2011, Judge Louis Stanton entered a default judgment against Reliable in favor of the Trustees for $1, 365, 050.92. Id., Dkt. No. 7. This judgment amount also remains outstanding.
C. The Trustees Appear in Anchor I's Bankruptcy Action
On June 3, 2010, Anchor I filed a petition for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Eastern District of New York. In re Anchor Tank Lines Corp., No. 10-45230 (Bankr. E.D.N.Y.) (" In re Anchor I "), Dkt. Nos. 1-4. Leonard Baldari filed the Affidavit in support of the petition as Chief Executive Officer of Anchor I. Id., Dkt. No. 2. Within a week, on June 8, 2010, the Trustees filed a notice of appearance in the Bankruptcy Action as creditors of Anchor I. Id., Dkt. No. 32. Ten days later, the Government moved to dismiss the bankruptcy action explaining that Leonard Baldari, the sole shareholder of Anchor I, did not have authority to file the petition because he had forfeited all of his interest in Anchor I to the United States in criminal forfeiture proceedings in United States v. Baldari. Id., Dkt. No. 52 at 1-3. On June 29, 2010, the bankruptcy action was dismissed on consent. Id. Dkt. Nos. 55 at 2, 57. Each of the above-mentioned filings was electronically served upon the Trustees.
D. Trustees Seek to Intervene in U.S. v. Baldari
In an effort to collect on their judgments, the Trustees restrained bank accounts held by Anchor I and Reliable and obtained writs of execution against assets held in those accounts. They sought an execution by the City of New York's Sheriff to seize Anchor I's vehicles and obtained a lien against specific vehicles. On October 13, 2010, the Government wrote to the Trustees and the Sheriff stating that a sealed forfeiture order in U.S. v. Baldari required all of Leonard Baldari's assets and those of Anchor I and Reliable to be paid ...