United States District Court, S.D. New York
MASON TENDERS DISTRICT COUNCIL OF GREATER NEW YORK, MASON TENDERS DISTRICT COUNCIL WELFARE FUND, PENSION FUND, ANNUITY FUND, TRAINING FUND, and JOHN J. VIRGA as FUNDS' DIRECTOR, Plaintiffs,
FORTUNE INTERIORS DISMANTLING CORP., PHOENIX INTERIORS, INC., SILVER SERVICES GROUP CORPORATION and GREAT AMERICAN INSURANCE COMPANY, Defendants.
OPINION & ORDER
PAUL A. CROTTY, District Judge.
Plaintiffs Mason Tenders District Council of Greater New York (the "Union"), Mason Tenders District Council Welfare Fund, Pension Fund, Annuity Fund, Training Fund and John J. Virga, in his fiduciary capacity as the Funds' Director (the "Funds") (collectively, the "Plaintiffs"), bring this suit under the Employee Retirement Income Security Act of 1974 ("ERISA") and Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, against Defendants Fortune Interiors Dismantling Corp., Phoenix Interiors, Inc., Silver Services Group Corporation and Great American Insurance Company (collectively, "Defendants"), claiming that Fortune and Phoenix owe Plaintiffs unpaid fringe benefit contributions required by collective bargaining agreements. Silver is said to be liable for these amounts too, as Fortune's alter-ego or as a single employer with Fortune. Plaintiffs move, and Defendants cross-move, for summary judgment on the question of Silver's liability for Fortune's debts. For the following reasons, both motions for summary judgment are denied.
Plaintiffs are "jointly administered, multi-employer, labor-management trust funds established and maintained pursuant to various collective bargaining agreements and trust agreements." Pl. 56.1 Statement ¶ 1. In 1993, William Palmadessa founded Fortune with his brother, who ceased involvement after a few years. Id. ¶¶ 8-9. From 1993 to 2011, Fortune did interior and exterior demolition. Id. ¶ 11. The majority of Fortune's work was interior demolition, and Fortune also operated a container service. Id. ¶¶ 13-14. Palmadessa served as Fortune's president, and his primary tasks included looking for work for the business, estimating project costs, and supervising employees. Id. ¶ 15. Fortune was based in Richfield, New Jersey. Id. ¶ 16. Fortune rented its facility from a company named Page Realty for $5000 to $6000 per month, but Fortune and Page Realty never had a lease. Id. ¶¶ 17-19.
A few years after founding Fortune, Palmadessa incorporated Phoenix Interiors, Inc., which performed the same demolition work and had the same staff as Fortune. Id. ¶¶ 21-22. On June 11, 2008, Phoenix merged into Fortune. Id. ¶ 23. Palmadessa acknowledged that Phoenix and Fortune were a single employer jointly and severally liable for any obligations and liabilities. Id. ¶ 27.
Fortune was a member of a multi-employer bargaining group, the Interior Demolition Contractors Association, beginning in the 1990s. Collective bargaining agreements entered into by the Association and the Union bound the Association's membership. Id. ¶¶ 24-25. The Association and the Union had three agreements in effect from July 1, 2004 through June 30, 2017. Id. ¶ 28. The Agreements require employers to contribute to the Funds "in an amount determined by an hourly rate multiplied by the number of hours worked by employees within the jurisdiction of the agreement, " require employers to deduct dues checkoffs and PAC contributions and remit them to the Union, and provide that all books and records must be available for inspection and audit by the Funds to verify that employers are paying the necessary contributions. Id. ¶¶ 30-32.
In August 2011, Fortune ceased its contributions, even though it continued to perform demolition work. Id. ¶¶ 41-42. Palmadessa stated that Fortune experienced cash flow problems. Id. ¶ 43. By December 2011, Palmadessa believed he owed $500, 000 to the Funds and the Union, and he offered to settle with them for $300, 000 but the Funds and the Union rejected this offer. Id. ¶¶ 46-47. He paid other bills with the $300, 000, and caused Fortune to transfer at least $339, 423 to Page Realty because he thought the Union would otherwise take it. Id. ¶¶ 48-50. In December 2011, Local 79, a constituent local member of the Union, withdrew its laborers from Fortune because of Fortune's delinquencies, at which point Fortune ceased performing demolition work. Id. ¶¶ 3 n.2, 57-58.
Beginning in the mid-1990s through 2011, Ciro D'Amato, who is married to Palmadessa's cousin, worked for Fortune as a low-ranking foreman. Id. ¶¶ 51-52. At the end of November 2011, Eugene Errico, Fortune's bookkeeper, helped D'Amato incorporate Silver Services as a for-profit domestic corporation based in New Jersey. Id. ¶¶ 45, 54-55. Errico discussed working as Silver's bookkeeper with D'Amato in December 2011. Id. ¶ 56. At that time, Silver began performing interior demolition work in New York and New Jersey. Id. ¶ 59. Bert Esposito, who had served as Fortune's dispatcher, worked as Silver's dispatcher. Id. ¶ 60. In addition to being the owner, D'Amato worked as a foreman. Id. ¶ 62. Several foremen, truck drivers, and laborers for Fortune began working for Silver. Id. ¶¶ 63-74.
For several months in 2012, Errico worked for no pay; later in the year, Silver began paying Errico the same salary he had earned at Fortune. Id. ¶ 76. Errico continued to perform bookkeeping tasks for Fortune from December 2011 through at least April 2013, although he was officially laid off from Fortune. Id. ¶ 77. He continued preparing and depositing Fortune's checks, and prepared and deposited Silver's checks from the same desk at Silver's office. Id. ¶ 79. Silver and Fortune both had bank accounts at Chase Manhattan Bank, and paid one another thousands of dollars. Id. ¶¶ 81-83. As of April 2013, Silver owed Fortune approximately $20, 000. Id. ¶ 84. At one point, Errico deposited a $10, 000 check to Fortune for a truck to Silver's bank account by handwriting Silver's name as an additional payee, which Errico later claimed was an error. Id. ¶ 85.
Beginning in December 2011, Palmadessa worked two to three days a week from a desk in Silver's office, where he also had a laptop and email address. Id. ¶¶ 87-88. Palmadessa performed estimating work for Silver. Id. ¶ 89. In one instance, Palmadessa prepared and distributed a flier for Silver that contained Fortune's phone number, fax number, and business address, and listed Palmadessa as Silver's contact person. Id. ¶¶ 90-94. The flier also stated that Silver had 75 years of experience, which was not true and was disingenuous. Id. ¶ 95. Palmadessa obtained approximately six jobs due to the flier. Id. ¶ 96. On a bid for demolition work, Palmadessa was listed as Silver's contact person, and D'Amato was not mentioned. Id. ¶ 97. Palmadessa was never paid by Silver. Id. ¶ 99. He considered himself an independent contractor, but was hoping to begin receiving payment at some point, and began billing Silver in April or May 2013. Id. ¶ 99-102. Silver also used the estimating services of Monir Ahmed, who previously worked for Fortune. Id. ¶ 103. Silver rented or borrowed all the equipment it needed during its first few months from Fortune, including crowbars, a van, a garage, Fortune's dumping license, trucks, and mini containers. Id. ¶¶ 104-09, 112. Fortune sold some equipment to Silver as well. Id. ¶¶ 113-18.
Three audits of Fortune and Phoenix in 2010, 2011, and 2012 showed that in total, Fortune owes $728, 349.58 in fringe benefit contributions and $90, 705.10 in dues checkoffs and PAC contributions for the period from December 27, 2006 to March 31, 2012. Id. ¶¶ 119-125. Errico was informed of these findings at the time of the audit. Id. ¶ 125. Fortune and Phoenix have conceded liability but have not responded to a proposed Affidavit of Confession of Judgment that Plaintiffs submitted on May 27, 2014. Id. ¶ 127.
I. Applicable Law
A party is entitled to summary judgment when there is "no genuine dispute as to any material fact, " Fed.R.Civ.P. 56(a), and "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, '" Chabad Lubavitch of Litchfield Cty., Inc. v. Litchfield Historic Dist. Comm'n, 768 F.3d 183, 192 (2d Cir. 2014) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). The Court must construe the facts "in the light most favorable to the non-moving party and must resolve all ambiguities and draw all reasonable inferences against the movant." Pandora Media, Inc. v. Am. Soc'y of Composers, Authors, & Publishers, 785 F.3d 73, 77 (2d Cir. 2015) (citation and internal quotation marks omitted). If "after adequate time for discovery and upon motion, [a party] fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial, " no genuine issue of material fact can exist. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The non-moving party may not prevail simply by means of "[c]onclusory allegations, ...