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Trustees of Operating Engineers' Local 324 Pension Fund v. Bourdow Contracting, Inc.

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

February 6, 2018

TRUSTEES OF THE OPERATING ENGINEERS' LOCAL 324 PENSION FUND, Plaintiff,
v.
BOURDOW CONTRACTING, INC., Defendant.

          OPINION AND ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [28]

          STEPHEN J. MURPHY, III United States District Judge.

         AND GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT [29] Plaintiff, a pension fund, brought the instant withdraw-liability claim pursuant to the Employee Retirement Income Security Act (ERISA). Plaintiff argues that Defendant, a construction company, is in fact the alter ego of a now-defunct predecessor company. DEFENDANT denied the claim and the two parties have filed cross motions for summary judgment. The Court has reviewed the initial and supplementary briefs and determined that a hearing is unnecessary. See E.D. Mich. LR 7.1(f). For the following reasons, the Court will deny Defendant's motion and grant Plaintiff's motion.

         BACKGROUND

         I. Fringe Benefits and Withdrawal Liability Under ERISA and the MPPAA

         Congress passed ERISA in 1974. One of the principal purposes of ERISA "was to ensure that employees and their beneficiaries would not be deprived of anticipated retirement benefits by the termination of pension plans before sufficient funds have been accumulated in the plans." Pension Ben. Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 720 (1984). But soon after its passage, Congress recognized that certain problems might arise concerning multiemployer plans and passed an additional act: the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA). The MPPAA:

requires that an employer withdrawing from a multiemployer pension plan pay a fixed and certain debt to the pension plan. This withdrawal liability is the employer's proportionate share of the plan's "unfunded vested benefits, " calculated as the difference between the present value of vested benefits and the current value of the plan's assets.

Id. at 725 (quoting 29 U.S.C. §§ 1381, 1391).

         Congress also recognized "the transitory nature of contracts and employment in the building and construction industry" and therefore treated employers within that industry slightly differently. Bd. of Trs., Sheet Metal Workers' Nat'l. Pension Fund v. Palladium Equity Partners, LLC, 722 F.Supp.2d 854, 873 (E.D. Mich. 2010) (citing Carpenters Pension Tr. Fund for N. Cal. v. Underground Constr. Co., 31 F.3d 776, 778 (9th Cir.1994). Under the MPPAA's construction-industry exception, a withdrawal occurs only if the employer "ceases to have an obligation to contribute under the plan, " yet "continues to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions were previously required, " or "resumes such work within 5 years after the date on which the obligation to contribute under the plan ceases, and does not renew the obligation at the time of the resumption." 29 U.S.C. § 1383(b)(2).

         II. Bourdow Trucking: 1967-2013

         Bourdow Trucking Company ("Trucking") was incorporated in 1967. ECF 29, PgID 529, ¶ 1. Its incorporators and original board of directors included Daniel Bourdow, Sr., Thomas Marx, and Mary Kruske, ECF 39-1, PgID 559. By 2012, the company was owned by four shareholders, all members of the Bourdow family. Dan Sr. and Patricia Bourdow-a married couple-each owned 30.7% of the company, and Dan Jr., Barb, Cindy, and Joe-their children-each owned 9.65%.[1] ECF 31, PgID 839-40. Dan Sr., Patricia, Dan Jr., and Joe also served as the company's officers, ECF 29-12, PgID 722. In addition to being officers, Dan Jr. and Joe also worked in supervisory roles, ECF 29-4, PgID 633; ECF 29-3, PgID 608, and other Bourdow family members worked for the company, too. For instance, Barb's husband Craig Kelly worked as an equipment operator from 1980 through 2012, ECF 29-15, 737, and Dan Jr.'s son Jason worked as a laborer, ECF 29-3, PgID 595.

         Trucking sold dirt and gravel and did site preparation and excavation work within the Lower Penninsula for several decades. ECF 31, PgID 840. The Bourdow children grew up working for the company, some never working anywhere else, ECF 29-2, PgID 567; ECF 29-3, PgID 592-93; ECF 29-4, PgID 632, and for as long as Barb Kelly could remember, Trucking was bound to a collective bargaining agreement (CBA) with Local 324 (the Union), ECF 29-2, PgID 571. But the company encountered "financial difficulties" in 2007 and terminated its agreement with the Union. ECF 28, PgID 426; ECF 29-2, PgID 569; ECF 28-6, PgID 485-86. Trucking negotiated with the Union for some time, but they did not reach an agreement. ECF 29-2, PgID 572-73.

         Despite the terminated CBA, Trucking's financial difficulties persisted. Around 2010, Trucking hired a CPA, Gregg Greenwood, to help Trucking address the financial problems. ECF 28-6, PgID 495. Greenwood attended Trucking's annual meetings and, according to him, in at least one meeting Joe and Dan Jr. seemed "disgruntled as to how things were going" with Trucking. Id. at 496. Specifically, they seemed concerned about "the top-heaviness of the company"-for instance, Cindy was continuing to draw compensation and fringe benefits despite not actually working within the company. Id. at 496-97. Greenwood testified that Joe and Dan Jr. were "adamant in the meetings . . . that the company [could] no longer operate in this fashion without making decisive cuts." Id. at 496. But changes were never made. Id. at 497.

         Although a CBA was no longer in effect, Trucking continued to remit fringe payments to the Union's pension fund (the Fund) into 2011. ECF 29-2, PgID 570-71; ECF 27-8, PgID 271. Barb testified that she continued to remit the funds "[b]ecause nobody told [her] to stop." ECF 29-2, PgID 570. Trucking eventually stopped paying fringes after the Fund sent back an uncashed check. Id. at 571, 573. All the while, Barb requested and received Trucking's withdrawal liability estimates. Id. at 575; ECF 29-6.

         On August 27, 2012, Defendant Operating Engineers Local 324 Pension Fund ("the Fund") sent Trucking a letter. ECF 29-8. The subject read, "Notice of Complete Withdrawal and Demand for Payment of Withdrawal Liability." The letter explained that "[b]ased on information currently available" to the Fund, it had "determined that Bourdow Trucking Co. completely withdrew from the Fund on or about July 2011, " resulting in an estimated withdrawal liability of $1, 163, 279. Accordingly, the letter laid out a payment schedule: Trucking was to pay 29 quarterly installments of $44, 456.15, along with one final payment of $23, 864.99. The first quarterly payment was due on November 1, 2012.

         Some of the family members disagreed with the liability assessment, so a meeting was called. ECF 28-6, PgID 489. The shareholder Bourdows attended the meeting, as did Greenwood, David Masud (Trucking's longtime labor lawyer), and John Lozano (a bankruptcy lawyer recently hired by Trucking). ECF 29-2, PgID 580; ECF 27-3, PgID 187. Greenwood recalled the meeting lasted one to two hours and, by the end, everyone was aware of Trucking's withdrawal liability and agreed that they could not pay the assessed amount. ECF 29-9, PgID 696. Greenwood also recalled that three options were put forward: (1) liquidate the company, (2) file for bankruptcy, or (3) work with the Fund on a compromise. Id. 697. No. decision was reached at the meeting. Id.

         On September 5, 2012, Masud called Paula Johnson, the Plant Manager for the Fund. ECF 29-5, PgID 661-63. According to Johnson, Masud informed her that Trucking "was a small family-owned company and that they didn't have any resources to fight an assessment and that they were just going to wind down their business and shut their doors[, ]" but "they were not interested in filing bankruptcy[.]"[2] ECF 29-5, PgID 661-62. Johnson referred Masud to the Fund's attorney, Nancy Pearce, and in a subsequent conversation with Pearce, Masud allegedly asked "if there was a way that the withdrawal liability assessment could be undone." Id. at 663. No. reply to Masud's question is in the record.

         Ultimately, Trucking failed to make its first payment on November 1, 2012 and the Fund referred the matter to outside counsel to pursue collection. ECF 28-6, PgID 499.The Fund then filed a lawsuit to recover the withdrawal liability payment later that month. See Operating Eng'rs Local 324 Pension Fund v. Bourdow Trucking Co., No. 2:12-cv-15118. Trucking filed for bankruptcy on March 12, 2013, thereby automatically staying the lawsuit and halting Trucking's then-active road project. ECF 32-4, PgID 1044-46.

         III. Bourdow Contracting: 2012-present

         Although Trucking was coming to an end in the f5all of 2012, a new Bourdow enterprise was beginning. Jason Bourdow signed the Articles of Organization for Defendant Bourdow Contracting, LLC ("Contracting") on October 29, 2012. ECF 32-11, PgID 1132. Lozano had prepared the documents and faxed them to the Michigan Department of Labor and Economic Growth on October 31, 2012; they were filed two days later. Id. at 1131. Under Contracting's operating agreement, Jason, Joe, and Dan Jr. each had a one-third interest. Id. at 1142. Dan Jr. explained that his "goal [in forming Contracting] was to keep working. I could not afford to retire so I had to keep working." ECF 27-3, PgID 192. Joe made a similar statement. ECF 29-4, PgID 657.

         Contracting bid on its first project on March 10, 2013 and more work has followed. ECF 32-4, PgID 1048; ECF 32-12, PgID 1144. The work is similar to that of Trucking: 90% of Contracting's work is in site preparation and excavation. ECF 28-3, PgID 441. The company is small-3-8 employees, depending on workload-and serves customers in Saginaw, Bay, and Midland counties. Id. at 442.

         STANDARD OF REVIEW

         Summary judgment is proper if 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). A fact is material for purposes of summary judgment if its resolution would establish or refute an "essential element[] of a cause of action or defense asserted by the parties[.]" Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir. 1984).

         In considering a motion for summary judgment, the Court must view the facts and draw all inferences in the light most favorable to the non-moving party. Stiles ex rel. D.S. v. Grainger Cty., Tenn., 819 F.3d 834, 848 (6th Cir. 2016). The Court must then determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). And although the Court may not make credibility judgments or weigh the evidence, Moran v. Al Basit LLC, 788 F.3d 201, 204 (6th Cir. 2015), a mere "scintilla" of evidence is insufficient to survive summary judgment; "there must be evidence on which the jury could reasonably find for the plaintiff, " Anderson, 477 U.S. at 252.

         DISCUSSION

         Trucking's bankruptcy meant that its withdrawal liability to the Fund-assessed at $1, 163, 279-went largely unpaid. The Fund now seeks to recover the liability payments from Contracting. The Fund argues that Contracting is actually the successor or alter-ego of Trucking and is therefore liable for the payments. Contracting denies this, and insists that the two companies are different in several important ways.

         I. Alter Ego Liability

         A. Actionability of Alter Ego ...


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