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Michigan Regional Council of Carpenters Employee Benefits Fund v. Elite Poured Walls, Inc.

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

May 24, 2017

Michigan Regional Council of Carpenters Employee Benefits Fund, et. al., Plaintiffs,
v.
Elite Poured Walls, Inc., et. al., Defendants.

          OPINION & ORDER DENYING DEFENDANTS' MOTION TO DISMISS

          Sean F. Cox United States District Judge

         This case involves Plaintiffs' claims that Defendants violated their collective bargaining agreement (“CBA”) with Plaintiff Michigan Regional Council of Carpenters (“Union) by failing to pay fringe benefits and by failing to submit pertinent books and records for an audit. Plaintiffs are the Union and 11 separate trust funds. Plaintiffs bring claims under ERISA and the Michigan Building Contract Fund Act. Defendants Elite Poured Walls and Mark Worrell conduct business in the building and construction industry. Defendants are allegedly obligated by the CBA to make employee fringe benefit contributions, for each employee covered by the CBA, to the Plaintiff Funds. According to the CBA, Defendants are also required to submit to periodic auditing of their books by Plaintiffs to ensure proper contributions are being made.

         Currently before the Court is Defendants' Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). In it, Defendants argue that: (1) Plaintiffs' complaint should be dismissed because no effective CBA or trust agreement was effective to require contributions for the period of 2011 through present; (2) Plaintiffs' complaint should be partially dismissed with respect to all claims for damages for the period of August 1, 2012 through present because the CBA was terminated as of August 1, 2012; (3) Plaintiffs' personal liability claims against Defendant Worrell should be dismissed because Plaintiffs have not plausibly alleged that Worrell is a fiduciary under ERISA; and (4) Plaintiffs' claims under the Michigan Building Contract Fund Act should be dismissed because they are preempted by ERISA. The motion has been fully briefed by the parties and the Court heard oral argument as to the motion on May 11, 2017.

         Defendants' 12(b)(6) motion should be dismissed because it pertains largely to issues of fact as opposed to the insufficiency of the pleadings. The motion is therefore DENIED.

         BACKGROUND

         A. Factual Background

         The Parties

         Plaintiffs in this case are: (1) the Michigan Regional Council of Carpenters (“Union”); (2) the Trustees of the Michigan Regional Council of Carpenters' Employee Benefits Fund; (3) Trustees of the Carpenters' Pension Trust Fund - Detroit and Vicinity; (4) Trustees of the Michigan Regional Council of Carpenters' Annuity Fund; (5) Trustees of the Michigan Statewide Carpenters and Millwrights Joint Apprenticeship and Training Fund; (6) Trustees of the Michigan Fund for the Advancement of the Carpentry Trade; (7) Trustees of the Carpenters' Labor Management Productivity and Training Fun; (8) Trustees of the Carpenters' Guaranty Fund; (9) Trustees of the Carpenters' Industry Advancement Fund; (10) Trustees of the Carpenters' Apprentice Reimbursement Fund; (11) Trustees of the Carpenters' Working Dues Fund; and (12) the Michigan Regional Council of Carpenters, United Brotherhood of Carpenters and Joiners of America.

         Defendant Mark Worrell (“Worrell) is an owner, officer and member of Defendant Elite Poured Walls, Inc. (“EPW”) (collectively, “Defendants”).

         Allegations In Plaintiff's Amended Complaint

         On May 30, 2003, Defendant Worrell (on behalf of Defendant EPW) executed a Poured Concrete Wall Association CBA, which extended through the 2003 year. (Am. Compl. at ¶10). The CBA, originally dated 1999-2001, is between Defendant EPW and Plaintiff Michigan Regional Council of Carpenters (the “Union”). The Plaintiff Funds are third-party beneficiaries to the CBA. (Id. at ¶13).

         Under its terms, the CBA “shall be renewed from year to year unless either party shall notify the other party, in writing, at least 90 days prior to any August 1st, beginning with August 1, 2001, of its desire to change in any way or terminate this Agreement.” (Ex. 1 to Am. Compl. at Pg ID 30). The CBA further provides that “[s]uch written notice shall be sent by certified mail to the other party. In the event notice is given by either party to change and no agreement on such changes is reached prior to August 1, 2001, this Agreement shall be deemed to have terminated on August 1, 2001.” (Id.).

         Plaintiffs allege that since at least May 30, 2003 to present, EPW was bound to the parties' CBA. (Id. at ¶11). Pursuant to the CBA, EPW agreed to make employee fringe benefit contributions and assessments to the Funds for each employee covered by the CBA, which are individuals in the appropriate bargaining unit who perform covered work, and to be bound by the terms and conditions set forth in the Funds' Trust Agreements. (Id. at ¶9). EPW was also required to submit pertinent books and records for an audit by the Funds for verification of said contributions. (Id. at ¶14).

         Participants of the Funds were allegedly employed by EPW to perform work and provide labor on various construction projects in Michigan. (Id. at ¶29). Plaintiffs allege that EPW was obligated to pay fringe benefit contributions to the Funds (Id. at ¶32) and that the participants earned outstanding fringe benefit contributions in connection with and in furtherance of their employment and labor on said projects. (Id. at ¶31). Plaintiffs allege that EPW received money on the projects, but failed to pay all of the fringe benefit contributions owed to the Funds. (Id. at 34).

         Plaintiffs allege that Defendant EPW and Defendant Worrell attempted to fraudulently avoid paying benefit contributions by sending Plaintiffs a letter, dated September 23, 2011, which falsely claimed that EPW was a “one employee unit.” (Id. at ¶25). The letter, which is signed by Defendant Worrell, stated as follows:

         Gentlemen:

Elite Poured Walls has maintained a stable one man unit for almost two years, has no expectations of expanding such unit in the future and has not had a signed collective bargaining agreement with your Union for about eight years. Therefore, Elite Poured Walls is withdrawing recognition and/or repudiating any agreement it may have with the Michigan Regional Council of Carpenters and/or any of its local unions.

(Ex. B to Def.'s Mo). Plaintiffs allege that this was not an effective notice to terminate the CBA (Id. at ¶12) because EPW was not a one employee unit during the times relevant to this complaint. (Id. at ¶25).

         B. Procedural Background

         Plaintiffs filed this action against Defendants on August 10, 2016. Plaintiff's Amended Complaint is the operative complaint in this case and it alleges the following counts: Count I - Failure to Permit Audit, in violation of ERISA and the CBA; Count II - Delinquent Contributions, in violation of ERISA and the CBA; ...


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