Board of Trustees v. Lane & Roderick, Inc.
Filing
UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 1:17-cv-00295-LMB-JFA. Copies to all parties and the district court. [1000359886]. [17-2205]
Appeal: 17-2205
Doc: 19
Filed: 09/04/2018
Pg: 1 of 4
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 17-2205
BOARD OF TRUSTEES, SHEET METAL WORKERS’ NATIONAL PENSION
FUND,
Plaintiff - Appellant,
v.
LANE & RODERICK, INC.,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern District of Virginia, at
Alexandria. Leonie M. Brinkema, District Judge. (1:17-cv-00295-LMB-JFA)
Submitted: July 30, 2018
Decided: September 4, 2018
Before NIEMEYER and WYNN, Circuit Judges, and TRAXLER, Senior Circuit Judge.
Affirmed by unpublished per curiam opinion.
Marc H. Rifkind, Alexander M. Gormley, SLEVIN & HART, P.C., Washington, D.C., for
Appellant. Kevin M. Williams, B. Patrice Clair, FORDHARRISON LLP, Washington,
D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
Appeal: 17-2205
Doc: 19
Filed: 09/04/2018
Pg: 2 of 4
PER CURIAM:
The Board of Trustees of the Sheet Metal Workers’ National Pension Fund (the
“Fund”) appeals the district court’s order denying its motion for summary judgment and
affirming the arbitrator’s award. The arbitrator found, in relevant part, that certain rent
accrued by Lane & Roderick, Inc. (“L&R”), as a liability was a bona fide debt and not an
equity contribution for purposes of withdrawal liability under section 4225(a) of the
Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1405(a)
(2012). The Fund contends that the accrued rent was not a bona fide debt and was instead
an equity contribution. We affirm.
We review de novo a district court’s grant or denial of summary judgment. Grayson
O Co. v. Agadir Int’l LLC, 856 F.3d 307, 314 (4th Cir. 2017). A court must grant summary
judgment for the moving party when that party “shows that there is no genuine dispute as
to any material fact and the [moving party] is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). The moving party has the initial burden of showing that it is entitled to
summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
Under the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), an
arbitrator’s factual findings are presumed to be correct. 29 U.S.C. § 1401(c) (2012); see
Freight Drivers & Helpers Local Union No. 557 Pension Fund v. Penske Logistics LLC,
784 F.3d 210, 216 (4th Cir. 2015). Nevertheless, and in contrast to most arbitration
proceedings, under the MPPAA, an arbitrator’s “decision is subject to judicial review.” Bd.
of Trs., Sheet Metal Workers’ Nat’l Pension Fund v. BES Servs., Inc., 469 F.3d 369, 375
(4th Cir. 2006); see Penske Logistics LLC, 784 F.3d at 216-17. In particular, we review an
2
Appeal: 17-2205
Doc: 19
Filed: 09/04/2018
Pg: 3 of 4
MPPAA arbitrator’s factual findings for clear error and legal conclusions de novo. BES
Servs., Inc., 469 F.3d at 375.
We review for clear error a factfinder’s determination that a particular financial
transaction is a debt or an equity contribution. * Rd. Materials, Inc. v. Comm’r, 407 F.2d
1121, 1124-25 (4th Cir. 1969); see also Hewlett-Packard Co. v. Comm’r, 875 F.3d 494, 497
(9th Cir. 2017). Under this standard, we may not reverse simply because “we would have
reached a different result had we considered the question in the first instance.” Sky Angel
U.S., LLC v. Discovery Commc’ns, LLC, 885 F.3d 271, 279 (4th Cir. 2018). Instead, to
find clear error, we must have “a definite and firm conviction that a mistake has been
committed.” Id.
In determining whether a transaction is properly classified as a bona fide debt or as
an equity contribution, courts apply an 11-factor test:
(1) the names given to the instruments, if any, evidencing the indebtedness;
(2) the presence or absence of a fixed maturity date and schedule of
payments; (3) the presence or absence of a fixed rate of interest and interest
payments; (4) the source of repayments; (5) the adequacy or inadequacy of
capitalization; (6) the identity of interest between the creditor and the
stockholder; (7) the security, if any, for the advances; (8) the corporation’s
ability to obtain financing from outside lending institutions; (9) the extent to
which the advances were subordinated to the claims of outside creditors; (10)
the extent to which the advances were used to acquire capital assets; and (11)
the presence or absence of a sinking fund to provide repayments.
*
The Fund argues in its reply brief that the proper standard of review is de novo
because, it contends, the district court did not apply the applicable 11-factor test. However,
“it is a well settled rule that contentions not raised in the argument section of the opening
brief are abandoned. An appellant cannot remedy the situation by raising the issue in his
reply brief.” Suarez-Valenzuela v. Holder, 714 F.3d 241, 249 (4th Cir. 2013) (brackets,
citation, and internal quotation marks omitted).
3
Appeal: 17-2205
Doc: 19
Filed: 09/04/2018
Pg: 4 of 4
Fairchild Dornier GmbH v. Official Comm. of Unsecured Creditors (In re Dornier Aviation
(N. Am.), Inc.), 453 F.3d 225, 233 (4th Cir. 2006) (internal quotation marks omitted).
“These factors all speak to whether the transaction appears to reflect the characteristics of
an arm’s length negotiation.” Id. at 234 (alteration and internal quotation marks omitted).
“This test is a highly fact-dependent inquiry,” and no single factor is dispositive. Id.
Importantly, “insider status . . . alone will normally be insufficient to support . . .
recharacterization” because, “[i]n many cases, an insider will be the only party willing to
make a loan to a struggling business, and recharacterization should not be used to
discourage good-faith loans.” Id. Ultimately, “[t]he balancing of the relevant factors
depends upon the unique circumstances of each case.” Cenex, Inc. v. United States, 156
F.3d 1377, 1382 (Fed. Cir. 1998) (internal quotation marks omitted).
Our consideration of the factors convinces us that the arbitrator did not clearly err
in finding that the accrued rent was a bona fide debt and not an equity contribution. Thus,
we conclude that the district court did not err in affirming the arbitrator’s decision.
Accordingly, we affirm the district court’s order. We dispense with oral argument because
the facts and legal contentions are adequately presented in the materials before this court
and argument would not aid the decisional process.
AFFIRMED
4
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?