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Carpenters Pension Trust Fund-Detroit and Vicinity v. Brunt Associates, Inc.

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

July 11, 2019

CARPENTERS PENSION TRUST FUND - DETROIT AND VICINITY et al., Plaintiffs,
v.
BRUNT ASSOCIATES, INC. et al., Defendants.

         ORDER (1) DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT (ECF #62), (2) GRANTING IN PART AND DENYING IN PART DEFENDANT BRUNT ASSOCIATES, INC.'S MOTION FOR JUDGMENT ON THE PLEADINGS OR FOR SUMMARY JUDGMENT (ECF #60), AND GRANTING DEFENDANT BRIAN BRUNT'S MOTION FOR JUDGMENT ON THE PLEADINGS OR FOR SUMMARY JUDGMENT (ECF #59)

          MATTHEW F. LEITMAN UNITED STATES DISTRICT JUDGE .

         In this action, Plaintiffs/Counter-Defendants Carpenters Pension Trust Fund - Detroit and Vicinity (the “Fund”), and two of its Trustees, Michael J. Jackson, Sr., and Thomas Woodbeck (the “Trustees, ” and, collectively with the Fund, “Plaintiffs”), seek to collect pension fund withdrawal liability allegedly owed by Defendants/Counter-Plaintiffs Brunt Associates, Inc. (“BAI”) and Brian Brunt (“Brunt”). Plaintiffs have asserted three claims against Brunt and BAI, and Brunt and BAI have asserted a number of counterclaims against Plaintiffs.

         Now pending before the Court are three motions: Plaintiffs' Motion for Summary Judgment (ECF #62); BAI's Motion for Judgment on the Pleadings or for Summary Judgment (ECF #60); and Brunt's Motion for Judgment on the Pleadings or for Summary Judgment (ECF #59). For the reasons explained below, Plaintiffs' motion is DENIED; BAI's motion is GRANTED IN PART AND DENIED IN PART; and Brunt's motion is GRANTED.

         I

         A

         The events giving rise to this civil action occurred against the backdrop of two federal statutes that govern multiemployer pension plans: the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq., and the Multiemployer Pension Plan Amendment Act (the “MPPAA”), 29 U.S.C. §§ 1381-1461, et seq. It is easier to appreciate the significance of the underlying events here with an understanding of how those two statutes operate. Thus, the Court begins with a brief overview of the relevant aspects of ERISA and the MPPAA.

         “Congress enacted ERISA to ensure that ‘if a worker has been promised a defined pension benefit upon retirement-and if he has fulfilled whatever conditions are required to obtain a vested benefit-he actually will receive it.'” DiGeronimo Aggregates, LLC v. Zemla, et al., 763 F.3d 506, 509-10 (6th Cir. 2014) (quoting Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 375 (1980)). “ERISA also created the Pension Benefit Guaranty Corporation (“PBGC”) to administer a newly-formed pension plan termination insurance program.” Id. “Under that program, PBGC would collect insurance premiums from covered pension plans and provide benefits to participants in those plans if their plans terminate with insufficient assets to support the guaranteed benefits.” Id.

         After ERISA had been in place for several years, “a significant number of multiemployer plans” began experiencing “extreme financial hardship, ” and the PBGC became “overwhelmed by obligations in excess of its capacity.” Id. At the direction of Congress, the PBGC analyzed the situation and determined that ERISA “failed to address the adverse consequences that occurred when an employer withdrew from a multiemployer pension plan.” Id. To address this shortcoming in ERISA, the PBGC “proposed rules under which a withdrawing employer would be required ‘to pay whatever share of the plan's unfunded vested liabilities was attributable to that employer's participation.'” Id. (quoting Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 723 (1984)). In response to the PBGC's proposal, Congress enacted the MPPAA. Id. “Relevant here, the MPPAA provides that if an employer withdraws from a multiemployer fund, it must make a payment of ‘withdrawal liability,' which is calculated as the employer's proportionate share of the fund's ‘unfunded vested benefits[.]'” Id. (quoting 29 U.S.C. § 1381(b)(1)).

         The MPPAA contains “detailed” provisions concerning the manner in which a multiemployer fund may attempt to collect withdrawal liability from an employer and the process through which the fund and the employer must resolve disputes concerning withdrawal liability. Mason & Dixon Tank Lines, Inc. v. Cent. States, Se. & Sw. Areas Pension Fund., et al., 852 F.2d 156, 159-60 (6th Cir. 1988). First, “[o]nce the plan sponsors determine that an employer has completely or partially withdrawn from a pension plan, they must [1] notify the employer of the amount of the liability, [2] prepare a schedule for liability payments, and [3] demand payment in accordance with the schedule.” Id. (citing 29 U.S.C. §§ 1382, 1399(b)(1)). Second, “[w]ithin 90 days after receiving notice, the employer may ask the plan sponsors to review any specific matter relating to the determination of liability and the schedule of payments, may identify any inaccuracy in the determination of the amount of the unfunded vested benefits allocable to the employer, and may furnish any additional relevant information to the plan sponsor.” Id. (citing 29 U.S.C. § 1399(b)(2)(A)). Third, “[a]fter reasonable review of any matter raised, the plan sponsors must then notify the employer of its decision, including the reasons for any change in the determination of the employer's liability or schedule of liability.” Id. (citing 29 U.S.C § 1399(b)(2)(B)). Finally, if a dispute concerning the determination of withdrawal liability remains after the completion of this review process, the employer has 60 days to initiate arbitration proceedings. See 29 U.S.C. § 1401(a)(1)(A).[1] Critically, “if an employer fails to [timely] demand arbitration, the assessment [of withdrawal liability] becomes ‘due and owing on the schedule set forth by the plan sponsor.'” Chi. Truck Drivers, Helpers and Warehouse Workers Union (Indep.) Pension Fund v. El Paso CGP Co., 525 F.3d 591, 595 (7th Cir. 2008) (quoting 29 U.S.C. § 1401(b)(1)).

         B

         The Fund is a multiemployer pension plan pursuant to Sections 3(37) and 4001(a)(3) of ERISA, 29 U.S.C. §§ 1002(37) and 1301(a)(3). (See Compl. at ¶4, ECF #1 at Pg. ID 2.) The Trustees, Jackson, Sr., and Woodbeck, are two members of the Fund's board of trustees. (See id.) The members of that board are the “plan sponsors within the meaning of … ERISA.” (Id.)

         BAI is a Michigan corporation that is in the building and construction industry. (See Countercls. at ¶52, ECF #28 at Pg. ID 731.) Brian Brunt is the Vice-President of BAI and a 17% owner of the company. (See Brunt Aff. at ¶1, ECF #59-4 at Pg. ID 1454.)

         For many years, BAI has had a relationship with the Fund. More specifically, under a series of collective bargaining agreements, BAI has been a contributing employer to the Fund.[2] (See Countercls. at ¶5, ECF #28 at Pg. ID 719)

         C

         In May of 2016, the Fund determined that BAI effected a complete withdrawal from the Fund within the meaning of Section 4203 of ERISA, 29 U.S.C. § 1583. As a result of that determination, the Fund assessed BAI $4, 242, 789.00 in withdrawal liability. The Fund then set out to notify BAI of the withdrawal determination and to collect the assessed withdrawal liability in accordance with the MPPAA procedures described above.

         The Fund first attempted to notify BAI of the withdrawal liability determination by letter from Fund attorney David Malinowski dated May 24, 2016 (the “May 24 Letter”). Malinowski wrote in the May 24 Letter that the Fund had concluded that BAI had “effected a withdrawal from the Fund” and that the “withdrawal occurred during the Plan Year beginning May 1, 2015.” (May 24 Letter, ECF #65-5 at Pg. ID 2392.) Malinowski also identified the amount of withdrawal liability determined to be owed by BAI: $4, 242, 789.00. (See id.) Finally, Malinowski demanded that BAI pay the withdrawal liability in accordance with a payment schedule that Malinowski included with the May 24 Letter. (See Payment Schedule, ECF #65-5 at Pg. ID 2394.) Thus, the May 24 Letter contained the three essential elements of a withdrawal liability notice under the MPPAA: the amount of the withdrawal liability, a demand for payment, and a schedule of liability payments. See 29 U.S.C. § 1399(b)(1).

         The parties have offered competing evidence as to whether BAI actually received the May 24 Letter prior to the commencement of this action. Plaintiffs have presented evidence that Malinowski sent the May 24 Letter to BAI on May 24, 2016, “at their registered business address in Wixom, Michigan.” (Malinowski Aff. at ¶4, ECF #62-5 at Pg. ID 2083.) Malinowski sent the letter to BAI via United Parcel Service (“UPS”). (See UPS Shipping Document, ECF #62-5 at Pg. ID 2092.) Plaintiffs have also submitted a UPS document entitled “Proof of Delivery” that purports to confirm that UPS delivered the letter to BAI's office in Wixom on May 25, 2016, at 10:06 a.m. (See UPS Proof of Delivery, ECF #62-5 at Pg. ID 2093-94.) The Proof of Delivery states that a person named “Johnson” signed for the letter on behalf of BAI. (See id.) The Proof of Delivery does not contain a signature by the person identified as Johnson. (See id.) Instead, it appears that a UPS employee typed Johnson's name into the Proof of Delivery document. (See id.) The Plaintiffs have further submitted a sworn affidavit from Ericka Johnson, a former BAI employee. (See Johnson Aff., ECF #62-3 at Pg. ID 2034.) In that affidavit, Johnson says that she worked at BAI until May 31, 2016, that her job involved receiving and signing for mail and packages that were delivered to BAI's offices, and that it was her regular practice to hand such deliveries directly to Brunt or to leave them on his chair if he was not present. (See Id. at ¶¶ 2, 4-5, Pg. ID 2034.) But Johnson did not specifically say in her affidavit that she received the May 24 Letter nor that she was even at the office on May 25, 2016 (the day UPS purports to have delivered it). And Plaintiffs have not submitted any employee time records from BAI confirming that Johnson was working on May 25, 2016, at the time that UPS allegedly made its delivery.

         BAI countered Plaintiffs' evidence of receipt with a sworn affidavit from Brunt. Brunt first explained that Malinowski “misaddressed” the May 24 Letter. (Brunt Aff. at ¶4, ECF #59-4 at Pg. ID 1455.) Malinowski sent the May 24 Letter to BAI at 48953 Wixom Tech Dr., Unit D, Wixom, Michigan (see May 24 Letter and UPS Shipping Document, ECF #62-5 at Pg. ID 2087, 2092), but Brunt explained in his affidavit that there is no “Unit D” at that address. (See Brunt Aff. at ¶4, ECF #59-4 at Pg. ID 1455.) Brunt further swore that neither he nor any other BAI officer received the May 24 Letter at the time Malinowski sent it.[3] (See Brunt Aff. at ¶8, ECF #59-4 at Pg. ID 1456.) Brunt added that BAI was in the process of moving out of its Wixom office at the time that UPS claims to have delivered the May 24 Letter to “Johnson, ” and he said that his office furniture had been packed up before the alleged delivery. (See Brunt Suppl. Aff. at ¶¶ 5, 16, ECF #59-18 at Pg. ID 1684.) Thus, Brunt insisted that if the May 24 Letter had been delivered to Johnson, she could not have left it on his chair as she may have done with previous deliveries. (See id.)

         By late July 2016, the Fund had not received any response to the May 24 Letter. It therefore decided to send a second letter from another of its attorneys, Paul Newcomer. Newcomer sent this letter on July 22, 2016, to Brunt personally at Brunt's home address (the “July 22 Letter”). (See July 22 Letter, ECF #59-5 at Pg. ID 1468.) The July 22 Letter expressed Newcomer's understanding that BAI “has ceased making contributions to the Pension Fund.” (Id.) But it did not say that the Fund had determined that BAI had effected a complete withdrawal, did not identify any amount of withdrawal liability owed by BAI, and did not demand that BAI make payments toward withdrawal liability pursuant to any proposed schedule of payments. (See id.) Instead, the July 22 Letter merely expressed the Fund's intention to “obtain information from [BAI] that is necessary to assist [BAI] in satisfying their obligations to the Fund under ERISA.” (Id. at Pg. ID 1468.) Neither BAI nor Brunt responded to the July 22 Letter.

         On August 11, 2016, the Fund sent a third letter to Brunt and BAI (the “August 11 Letter”). (See August 11 Letter, ECF #59-6.) Malinowski wrote the August 11 Letter, and he mailed it to both BAI and Brunt. (See Id. at Pg. ID 1500.) Brunt admits he received the August 11 Letter at his home. (See Brunt Aff. at ¶16, ECF #59-4 at Pg. ID 1457.) Malinowski first wrote in the August 11 that a “Notice of Demand for Payment of Withdrawal Liability was forwarded to your attention on May 24, 2016.” (August 11 Letter, ECF #59-6 at Pg. ID 1500.) This was a reference to the May 24 Letter that, as described above, BAI and Brunt say that they did not receive.

         Malinowski then told Brunt and BAI that the amount of BAI's withdrawal liability “is $4, 242, 789.00.” (Id.) The rest of the August 11 Letter provided as follows:

         The notice called for payment of your withdrawal liability in one of two ways:

1. The entire outstanding obligation on or before August 1, 2016; or
2. By monthly installments in accordance with the payment schedule which accompanied the notice and demand. These installments include amortization charges on the unpaid balance.
Your account is past due. Please note that interest is charged on the delinquent monthly installments. To avoid future collection enforcement activity, please forward payment for the above balance immediately to the following address:
NOVARA TESIJA, P.L.L.C. Attention: David Malinowski 2000 Town Center, Suite 2370 Southfield, MI 48075-1314
If payment is not received with 60 days from the date of this notice you will be held in default in accordance with Section 4219 of ERISA, and the account will be reviewed for collection.

(Id.; emphasis in original.) While the August 11 Letter referenced the proposed payment schedule that Malinowski included with the May 24 Letter (which Brunt and BAI allege that they did not receive), the August 11 Letter did not restate or include that payment schedule (or any other ...


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