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Laborers Pension Trust Fund v. L.V. Painting & Contracting, Inc.

United States District Court, E.D. Michigan, Southern Division

January 26, 2017

LABORERS PENSION TRUST FUND - DETROIT AND VICINITY, et al., Plaintiffs,
v.
L.V. PAINTING & CONTRACTING, INC., et al., Defendants.

          OPINION AND ORDER DENYING PLAINTIFFS' MOTION TO STRIKE DEFENDANTS' CROSS CLAIMS [33]

          Nancy G. Edmunds United States District Judge

         Plaintiffs move to strike the crossclaims of Defendant L.V. Painting & Contracting, Inc. (“LV”) and Defendant Sachse Construction and Development Company, LLC (“Sachse”). Plaintiffs argue that Defendants' crossclaims should be stricken because: (1) they do not conform with Rule 13(g); and (2) they contravene the purpose of ERISA.[1] For the following reasons, Plaintiffs' motion is DENIED.

         I. Background[2]

         This dispute relates to the redevelopment of a building known as the Moon Building at Merchant's Row (the “Project”). Sachse was the general contractor on the Project, and LV was a subcontractor that performed abatement and demolition work. Defendant Michael Scott is LV's co-owner and President. The other Defendant, Travelers Casualty and Surety Company (“Travelers”), issued a contract bond for Sachse on the Project and served as a surety to the bond on Sachse's behalf.

         Plaintiffs are trust funds established under and administered pursuant to Section 302 of the Labor-Management Relations Act (“LMRA”), 29 U.S.C. § 186, et seq., and the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001. (Dkt. 5, at ¶ 1.) As alleged by Plaintiffs, LV is bound by a collective bargaining agreement that required it to remit periodic ERISA payments to Plaintiffs for the work LV performed on the Project. (Id. at ¶ 10.) LV allegedly failed to remit such payments, so Plaintiffs brought this suit against LV and Scott. Plaintiffs later added Sachse and Travelers as defendants in their Amended Complaint.

         On August 10, 2016, after receiving Plaintiffs' Amended Complaint, LV filed crossclaims against Sachse and Travelers. (Dkt. 20.) Sachse in turn filed crossclaims against LV and Scott on August 26, 2016. (Dkt. 26.) Then, on September 28, 2016, Plaintiffs filed this motion to strike the crossclaims of both LV and Sachse. Plaintiffs argue that Defendants' crossclaims are not closely related to Plaintiffs' claims, so the Court reviews all the claims below.

         A. Plaintiffs' Claims

         In Count I of the Amended Complaint, Plaintiffs allege that LV is liable for failing to remit required fringe benefit contributions from April 2015 through March 2016. Count II alleges that Scott and LV are jointly and severally liable for these unpaid contributions because they conducted business under a corporate alter ego to evade their payment obligations. In Count III, Plaintiffs allege that LV and Scott are liable for violating the Michigan Builders Trust Fund Act (“MBTFA”), MCL 570.151, et seq. According to Plaintiffs, the MBTFA required LV and Scott to hold the payments they received for work on the Project in trust for Plaintiffs' benefit. But LV and Scott allegedly misappropriated such funds, rendering them liable under the MBTFA.

         Count IV next alleges that LV and Scott are liable for actual fraud because they intentionally submitted false contribution reports to Plaintiffs. Finally, Count V alleges that Sachse and Travelers, pursuant to the contract bond, are obligated to pay the contributions owed to Plaintiffs.

         B. LV's Crossclaims Against Sachse and Travelers

         LV's crossclaims against Sachse and Travelers relate to Sachse's alleged failure to pay both (1) the amount owed to LV on the subcontract and (2) an additional amount LV requested when the conditions of the Project increased the scope of the work and raised labor costs. In Counts I and II, LV alleges that Sachse, as principal, and Travelers, as surety, are liable to LV for breach of contract. In Count III, LV alleges that Sachse and Travelers are liable to LV for a material breach of the contract bond. Count IV next alleges that Sachse and Travelers are liable in quantum meruit. Finally, in Count V, LV alleges that it has a valid claim of lien on a bond related to the Project.

         C. Sachse's Crossclaims Against LV and Scott

         Sachse's crossclaims comprise six counts.[3] Count I alleges that LV breached the subcontract by, inter alia, failing to perform the work timely and properly. Count II alleges that LV breached its contractual indemnification obligation by exposing Sachse to claims and liens for labor performed and materials used on the Project. Count III then alleges that LV violated the MBTFA by diverting monies paid by Sachse. Counts IV and V next allege violations of fiduciary duties and conversion, respectively. Finally, Count VI (erroneously numbered “Count V”), alleges that LV and Scott committed fraud by intentionally submitting false statements regarding payments on the Project.

         II. ...


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