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Trustees of New York City District Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund, and Apprenticeship, Journeyman Retraining, Educational and Industry Fund v. Nguyen

United States District Court, S.D. New York

February 17, 2017

TRUSTEES OF THE NEW YORK CITY DISTRICT COUNCIL OF CARPENTERS PENSION FUND, WELFARE FUND, ANNUITY FUND, and APPRENTICESHIP, JOURNEYMAN RETRAINING, EDUCATIONAL AND INDUSTRY FUND, TRUSTEES OF THE NEW YORK CITY CARPENTERS RELIEF AND CHARITY FUND, THE NEW YORK CITY AND VICINITY CARPENTERS LABOR-MANAGEMENT CORPORATION, and the NEW YORK CITY DISTRICT COUNCIL CARPENTERS, Plaintiffs,
v.
TONY NGUYEN, Defendant.

          OPINION & ORDER

          HONORABLE PAUL A. CROTTY, United States District Judge

         Plaintiffs in the above-captioned case (collectively, "Plaintiffs") are employer and employee trustees of multi-employer labor management trust funds (the "Funds") which are subject to the Employee Retirement Income Security Act of 1974 ("ERISA"). Defendant Tony Nguyen ("Defendant" or "Nguyen") is the sole member, officer and director of Nguyen Custom Woodworking LLC ("NCW"). Plaintiffs seek to hold Nguyen personally liable for damages caused by his use of assets in NCW's possession for purposes other than remitting requisite contributions to the Funds.[1] The parties now cross-move for partial summary judgment, pursuant to Fed.R.Civ.P. 56, on three discrete issues: whether Nguyen can be held personally liable; whether an arbitration award is binding on Nguyen to the extent it quantifies damages for NCW's unpaid contributions covering the period June 25, 2010 through September 30, 2013; and whether Nguyen has the burden of proof regarding damages for NCW's unpaid contributions covering two additional time periods.

         For the following reasons, Plaintiffs' motion is GRANTED on all three issues, and Defendant's motion is DENIED.

         LEGAL STANDARD

         Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The Court "resolve[s] all ambiguities and draw[s] all reasonable inferences in the light most favorable to the nonmoving party." Summa v. Hofstra Univ.. 708 F.3d 115, 123 (2d Cir. 2013). Summary judgment is warranted where "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Smith v. Cnty. of Suffolk, 776 F.3d 114, 121 (2d Cir. 2015) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp.. 475 U.S. 574, 587 (1986)).

         BACKGROUND

         Plaintiffs are fiduciaries of the Funds within the meaning of ERISA § 3(21), 29 U.S.C. § 1002(21). PI. 56.1(a) Stmt, ECF 24 ¶ 1. NCW was a party to an Independent Shop Agreement and an Independent Building Construction Agreement. Id. at ¶ 5; see ECF 25 Ex. 1 at ¶ 10, Ex. 2 at ¶ 10, Ex. 4 at 19-23, Ex. 5, Ex. 6. Nguyen signed both agreements as NCW's principal member. PI. 56.1(a) Stmt., ECF 24 ¶¶ 2-4; ECF 25 Ex. 5, Ex. 6; ECF 33 at ¶ 7.[2]

         The two agreements require NCW to make hourly contributions for specified work (the "Covered Work"), and to furnish its books and records to the Funds for audits upon request. PI. 56.1(a) Stmt., ECF 24 ¶¶ 6-7.

         Each of the Funds is governed by a trust agreement; the terms of the trust agreements are incorporated by reference into the two agreements which were in effect as of the effective date of June 26, 2007. Id. at ¶¶ 26-28; ECF 25 Ex. 5 at Preamble, Art. IX Section 12, Ex. 6 at Art. XV Section 3, Art. XXI.

         The Third Amendments of each trust agreement, all adopted on March 22, 2007, define the "assets of [each] Fund" to include not only the money that employers have contributed, but also "the sums of money ... which are due and owing to the Fund by the Employers as required by the applicable collective bargaining agreement." PI. 56.1(a) Stmt., ECF 24 ¶¶ 29-32; see ECF 25 Ex. 11 at Third Amendment, Ex. 12 at Third Amendment, Ex. 13 at Third Amendment, Ex. 14 at Third Amendment. The Independent Shop Agreement additionally provides that "[i]f during the life of this Agreement, the Trustees of any fringe benefit fund adopt a rule which provides for personal liability of an owner of an Employer cooperation [sic] to pay fringe benefit contributions due under this Agreement, such Rule of Trustees will not be a basis for enforcing personal liability for said payment under this Agreement." ECF 25 Ex. 5 at Art. IX Section 12.

         The Funds conducted an audit of NCW's books and records for the period covering June 25, 2010 through September 30, 2013 (the "First Audit Period"), which showed a delinquency of $88, 425.84, which NCW failed to pay despite demand. PI. 56.1(a) Stmt., ECF 24 at ¶¶ 8-10. The Funds initiated arbitration to resolve the dispute, as permitted. Id. at ¶¶ 11-14. At the April 1, 2015 arbitration hearing, which Nguyen attended with NCW's counsel, the Funds presented evidence of the delinquency; NCW did not present any evidence. Id. at ¶ 15. The arbitrator issued an award on April 3, 2015 in favor of the Funds, finding that NCW violated the terms of the agreements and ordering NCW to pay the Funds $125, 201.29 (the "Arbitration Award").[3] Id. at ¶¶ 12, 16. NCW has not paid any of the Arbitration Award, despite demand. Id. at ¶ 17.

         Additional audits for the periods covering October 1, 2013 through May 26, 2015 (the "Second Audit" and "Second Audit Period") and May 27, 2015 through September 24, 2015 (the "Third Audit" and "Third Audit Period") showed that NCW employees performed Covered Work during these periods but NCW made no contributions. Id. at ¶¶ 19-25. Nguyen disputes the dollar amounts shown in both the Second Audit ($1, 880, 925.76) and the Third Audit ($363, 600.14), see Id. at ¶¶ 21, 24; Def. 56.1(a) Stmt., ECF 32 ¶¶ 21, 24, but agrees that NCW has not paid any portion of these delinquencies. See PI. 56.1(a) Stmt., ECF 24 ¶¶ 22, 25; Def. 56.1(a) Stmt., ECF 32 ¶¶ 22, 25.

         Nguyen admits that he was the "only person currently or previously employed or engaged by NCW who has or had authority to withdraw funds from one or more of NCW's bank accounts." ECF 25 Ex. 3 at Response 6. Nguyen also testified that he used money in NCW's possession to pay parties other than the Funds; his own personal expenses; and undocumented immigrant employees.[4] See ECF 25 Ex. 4 at 28-29, 32-41; see also PI. 56.1(a) Stmt., ECF 24 ¶¶ 34-38.

         NCW filed for relief under Chapter 11 of the Bankruptcy Code on May 26, 2015 in the United States Bankruptcy Court for the Southern District of New York. PI. 56.1(a) Stmt., ECF 24at¶18.

         Plaintiffs brought this action on July 13, 2015, alleging breach of fiduciary duty under ERISA § 409, as ...


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