Solis v. Hardt et al

Filing 33

JOINT STIPULATION and ORDER as to Nondischargeability of Debt, signed by Chief Judge Anthony W. Ishii on 9/14/12. (Hellings, J)

1 Janet M. Herold, Regional Solicitor
Bruce L. Brown, Associate Regional Solicitor
2 Danielle L. Jaberg, Counsel for ERISA
Evan H. Nordby, Trial Attorney, WSBA #35937
3 Office of the Solicitor
U.S. Department of Labor
4 300 Fifth Ave., Suite 1120
Seattle, WA 98104
[phone]
5 Telephone:
Facsimile:
[phone]
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Attorneys for Hilda L. Solis, Secretary of Labor,
7 United States Department of Labor, Plaintiff
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UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF CALIFORNIA
FRESNO DIVISION

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In re

)
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TIMOTHY JOHN HARDT fdba HARDEL, )
INC. fdba JOURNEY ELECTRICAL
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TECHNOLOGIES, INC. fdba THE
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FITNESS CENTRE, LLC DELAWARE fdba
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TRI STATE, INC. fdba THE FITNESS
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CENTRE LLC CA_101 and MICHELLE
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RENE HARDT
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Debtors.
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HILDA L. SOLIS, Secretary of Labor,
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United States Department of Labor,
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Plaintiff,
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vs.
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TIMOTHY JOHN HARDT fdba HARDEL, )
INC. fdba JOURNEY ELECTRICAL
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TECHNOLOGIES, INC. fdba THE
)
FITNESS CENTRE, LLC DELAWARE fdba )
TRI STATE, INC. fdba THE FITNESS
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CENTRE LLC CA_101 and MICHELLE
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RENE HARDT,
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Defendants.
)
)

District Ct. No. 1:10-CV-01847-AWI-JLT
Bankruptcy No. 09-62756-A-7
Adversary No.: 10-01206-A
JOINT STIPULATION AND ORDER AS
TO NONDISCHARGEABILITY OF
DEBT

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Plaintiff-Creditor HILDA L. SOLIS, Secretary of Labor, United States Department

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of Labor (“Secretary”), on behalf of the Journey Electrical Technologies, Inc. 401(k) Plan

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(“Plan” or “401(k) Plan”), and TIMOTHY JOHN HARDT fdba HARDEL, INC. fdba

4 JOURNEY ELECTRICAL TECHNOLOGIES, INC. fdba THE FITNESS CENTRE, LLC
5 DELAWARE fdba TRI STATE, INC. fdba THE FITNESS CENTRE LLC CA_101
6 (“Debtor”) and MICHELLE RENE HARDT (collectively “Debtors”), having agreed to
7 resolve any dispute as to the dischargeability of the debt owed by the Debtors to the Plan,
8 and pursuant to L.R. 143 and 144, hereby consent to the following Joint Stipulation and
9 Order as to Nondischargeability of Debt (“Stipulation”) and entry of an Order from the
10 Court in accordance herewith:
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1.

On December 30, 2009, the Debtors filed a Petition for protection under

Chapter 7 of the Bankruptcy Code in this Court.
2.

The Notice to Creditors in this matter stated that it was not necessary to file a

Proof of Claim, as there were no assets to distribute in this matter; therefore, the Secretary
did not file a Proof of Claim.
3.

This Court has jurisdiction over the parties and the subject matter of this

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Stipulation.
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4.

Debtor Timothy Hardt is a fiduciary of the Plan within the meaning of

Section 3(21), 29 U.S.C. § 1002(21), of the Employee Retirement Income Security Act of

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1974 (“ERISA”).

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5.

The Plan is an employee benefit plan within the meaning of section 3(3) of

21 the ERISA, 29 U.S.C. § 1002(3).
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6.

Debtor Timothy Hardt breached the fiduciary duties imposed upon him by

23 ERISA Sections 404(a)(1)(A), (B) and (D), 406(a)(1)(B), 406(b)(1) & (2), and 403(c)(1), 29
24 U.S.C. §§ 1104(a)(1)(A), (B), & (D); 1106(a)(1)(B), 1106(b)(1) & (2), and 1103(c)(1), by
25 failing to remit, and remit timely, employee contributions and participant loan payments to
26 the 401(k) Plan.

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7.

Debtor Timothy Hardt further breached the fiduciary duties imposed upon

him by ERISA Sections 404(a)(1)(A), (B) and (D), and 406(b)(2), 29 U.S.C.
§§ 104(a)(1)(A), (B), & (D), 1106(b)(2), by failing to collect, and collect timely, mandatory

4 employer prevailing wage contributions due to the 401(k) Plan.
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8.

As a result of the fiduciary breaches set forth in Paragraphs 6 and 7, supra,

6 and the Consent Judgment and Order between the Secretary of Labor and Defendant
7 Timothy John Hardt agreed to contemporaneously with this filing in Solis v. Hardt et al.,
8 Case No. 1:10-CV-02283-AWI-JLT, Debtor Timothy Hardt owes a debt of $472,235.11 to
9 the 401(k) Plan (“Amount Due”). Interest shall accrue on the Loss Amount at the rate set
10 forth in 28 U.S.C. § 1961 from the date this Court enters an Order finding the Amount Due
11 is nondischargeable until such time as the Amount Due is paid to the Plan in full.
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9.

The debt to the Plan arose from Debtor Timothy Hardt’s breaches of

fiduciary duties owed to the Plan, as set forth in Paragraphs 6 and 7, supra, and such
breaches also constitute fiduciary defalcation under Section 523(a)(4) of the Bankruptcy
Code, 11 U.S.C. § 523(a)(4).
10.

The parties consent to an entry of an Order that the debt to the Plan shall be a

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nondischargeable debt, without the need for trial or adjudication of any issue of fact or law.
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11.

This Joint Stipulation and Order does not in any manner affect the right of the

United States Department of Labor to assess a civil penalty of twenty percent (20%) on
amounts recovered pursuant to ERISA § 502(l), 29 U.S.C. § 1132(l), after the full recovery
of the Amount Due under the Consent Judgment and Order referred to in Paragraph 8 infra.

21 This Joint Stipulation and Order does not in any manner affect the right of Defendant Hardt
22 to apply for a waiver of such civil penalty pursuant to 29 C.F.R. § 2570.85-86, or contest
23 such civil penalty assessment under Title 11 of the United States Code.
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12.

While Section 524 of the Bankruptcy Code, 11 U.S.C. § 524, provides that

25 any agreement for the nondischargeability of debt may be rescinded at any time prior to
26 discharge or within sixty (60) days after such agreement is filed with the court, whichever

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occurs later, Debtors agree that they will not rescind this Stipulation as to
Nondischargeability of Debt.
13.

The parties understand that this agreement is not required under Title 11 of

4 the United States Code, under non-bankruptcy law, or under any agreement not in
5 accordance with the provisions of 11 U.S.C. § 524(c)(2)(B).
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14.

Debtors expressly waive any and all claims of any nature, which they have or

7 believe they may have against the United States Department of Labor, the Secretary, or any
8 of her officers, agents, employees, or representatives, arising out of or in connection with the
9 filing, prosecution, and maintenance of this adversary proceeding and any other proceeding
10 or investigation incident to this adversary proceeding.
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15.

Nothing in this Stipulation is binding on any governmental agency other than

the Employee Benefits Security Administration, United States Department of Labor.
16.

The parties shall bear their own costs, expenses, and attorneys’ fees incurred

in connection with any stage of the above-referenced proceeding to date, including but not
limited to, attorneys’ fees which may be available under the Equal Access to Justice Act, as
amended.

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The Secretary hereby waives and releases all claims asserted in her

Adversary Complaint against Debtor Michelle Rene Hardt.

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The Court directs the entry of this Joint Stipulation and Order as a final order.
IT IS SO ORDERED, ADJUDGED, and DECREED.

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The undersigned consent to the foregoing Stipulation and consent to the entry of an
Order from the Court consistent herewith.

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Approved this _____ day of___________,
2012:

Approved this ___ day of _________, 2012:

By: _______________________
TIMOTHY HARDT

M. PATRICIA SMITH
Solicitor of Labor

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Approved this _____ day of___________,
2012:

JANET M. HEROLD
Regional Solicitor
BRUCE L. BROWN
Associate Regional Solicitor, Seattle

By: _______________________
MICHELLE HARDT
Approved as to form this _____ day of
____________, 2012:
By: _____________________
Ray T. Mullen, Esq.
Law Office Of Ray T. Mullen
1405 Commercial Way, Suite 130
Bakersfield, California 93309

DANIELLE L. JABERG
Counsel for ERISA

By: __________________________
EVAN H. NORDBY
Trial Attorney
Attorneys for Plaintiff
United States Department of Labor

Murray Tragish, Esq.
Law Offices of Murray Tragish
1405 Commercial Way, Suite 130
Bakersfield, California 93309
Counsel for Defendant Timothy Hardt

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21 IT IS SO ORDERED.
22 Dated: September 14, 2012
CHIEF UNITED STATES DISTRICT JUDGE
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DEAC_Signature-END:

0m8i788

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