Carpenters Pension Trust Fund for Northern California et al v. Lindquist
Filing
47
ORDER by Judge Samuel Conti granting 28 Motion for Summary Judgment (sclc2, COURT STAFF) (Filed on 7/19/2011) (Additional attachment(s) added on 7/19/2011: # 1 proof of service) (tdm, COURT STAFF).
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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CARPENTERS PENSION TRUST FUND FOR
NORTHERN CALIFORNIA, et al.
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Plaintiffs,
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v.
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For the Northern District of California
United States District Court
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11
MARK ALAN LINDQUIST,
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Defendant.
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) Case No. 10-3386 SC
)
) ORDER GRANTING PLAINTIFFS'
) MOTION FOR SUMMARY JUDGMENT
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I.
INTRODUCTION
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Before the Court is a Motion for Summary Judgment, brought
18
by Plaintiffs Board of Trustees of the Carpenters Pension Trust
19
Fund for Northern California, et al. ("the Pension Fund" or
20
"Plaintiffs"), against Defendant Mark Alan Lindquist
21
("Lindquist" or "Defendant").
22
is fully briefed.
23
considered the papers submitted, the Court concludes that entry
24
of Summary Judgment against Defendant is appropriate, and GRANTS
25
Summary Judgment in favor of Plaintiffs.
ECF No. 28 ("Mot.").
The Motion
ECF Nos. 40 ("Opp'n"), 42 ("Reply").
Having
26
27
28
II.
BACKGROUND
This action arises from Plaintiffs' efforts to recover
withdrawal liability owed by M.A. Lindquist Co., Inc. ("the
2
Company") under the Employee Retirement Income Security Act
3
("ERISA").1
4
against the Company in favor of the Pension Fund in a related
5
proceeding.
6
M.A. Lindquist Co., Inc., No. 10-812, 2011 U.S. Dist. LEXIS
7
12261 (N.D. Cal. Feb. 8, 2011).
8
sole shareholder.
9
10:7-24.2
10
For the Northern District of California
United States District Court
1
On February 8, 2011, this Court entered judgment
See Carpenters Pension Trust Fund for N. Calif. v.
Lindquist was the Company's
McDonough Decl. Ex. B ("Lindquist Dep.") at
The Pension Fund now seeks to recover the Company's
withdrawal liability from Lindquist directly.
11
A.
The Company's Withdrawal from the Pension Fund
12
The following facts are undisputed.
During the time period
13
at issue in this lawsuit, Defendant owned one hundred percent of
14
the outstanding shares of the Company.
15
participating employer in the Pension Fund.
16
("Answer") ¶ 10; Price Decl. ¶ 5.3
17
obligated to make contributions to fund benefits for employees
18
under the Pension Fund pursuant to a collective bargaining
19
agreement with the Carpenters 46 Northern California Counties
Id.
The Company was a
ECF No. 9
As such, the Company was
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1
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22
23
24
25
As explained more fully below, ERISA requires an employer that
withdraws from a multiemployer pension plan to compensate the
pension plan for benefits that have already vested with the
employees at the time of the employer's withdrawal. This
"withdrawal liability" is assessed against the employer to
ensure that employees are not deprived of anticipated retirement
benefits by virtue of their employer's withdrawal from the
pension plan before the plan has amassed sufficient funds to
cover the benefits owed to employees.
2
26
Katherine McDonough ("McDonough"), attorney for Plaintiffs,
filed a declaration in support of the Motion. ECF No. 28-2.
27
3
28
Gene Price ("Price"), Administrator of the Carpenters Pension
Trust Fund, filed a declaration in support of the Motion. ECF
No. 28-1.
2
Conference Board of the United Brotherhood of Carpenters and
2
Joiners of America, the Agreement and Declaration of Trust of
3
the Pension Fund, and Section 515 of the ERISA, 29 U.S.C. §
4
1145.
5
Id.
On or about April 1, 2006, the Company withdrew from the
6
Pension Fund.
7
1, 2006, the Pension Fund sent the Company a Notice of
8
Withdrawal Liability informing the Company that it owed the
9
Answer ¶ 12; Price Decl. ¶ 5.
On or about August
Pension Fund $954,508 and attaching the actuarial calculations
10
For the Northern District of California
United States District Court
1
in support of this figure.
Price Decl. Ex. A ("Aug. 1, 2006
11
Notice").
12
follow-up letter on August 10, 2006.
13
Letter").
14
informing it that if an installment payment of $11,816 was not
15
received within sixty days, the Pension Fund would require
16
immediate payment of the entire withdrawal liability amount.
17
Id. Ex. C ("Oct. 5, 2006 Letter").
18
undeliverable.
19
hand delivered the August 1, 2006 Notice and the October 5, 2006
20
Letter to the Company.
21
the Company received the withdrawal liability demand.
22
Decl. Ex. B ("Def.'s Resp. to Pls.' RFA") at 2.
23
Plaintiffs have not received a withdrawal liability payment from
24
the Company or from Lindquist.
Plaintiffs received no payment and sent the Company a
Id. Ex. B ("Aug. 10, 2006
On October 5, Plaintiffs sent the Company a letter
Id.
The letter was returned as
On November 13, 2006, Plaintiffs' agent
Price Decl. ¶ 12.
Lindquist admits that
McDonough
To date,
Price Decl. ¶ 13.
25
The Company did not submit a request for review of its
26
withdrawal liability to the Pension Fund or initiate arbitration
27
proceedings regarding the assessment of its withdrawal
28
liability.
Price Decl. ¶¶ 14-15; Def.'s Resp. to Pls.' RFA at
3
2-3.
On February 26, 2010, the Pension Fund filed suit against
2
3
the Company ("the 10-812 action") under ERISA seeking to recover
4
the payments owed.
5
Fund, No. 10-812 (N.D. Cal. Feb. 26, 2010), ECF No. 1.
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August 2, 2010, the Pension Fund filed this parallel action
7
against Lindquist in his personal capacity.
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("Compl.").
9
judgment against the Company in the 10-812 action.
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For the Northern District of California
United States District Court
1
See Complaint, Carpenters Pension Trust
On
ECF No. 1
On February 8, 2011, the Court granted summary
2011 U.S.
Dist. LEXIS 12261, at *11.
11
B.
12
In or around 1999, Lindquist and his wife purchased a
13
commercial property located at 1701 Martin Luther King Jr. Way
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in Oakland, California ("the 1701 Property").
15
11:4-45.
16
1999 for $2,000 per month.
17
the 1701 Property for office space for superintendents and
18
foremen, for equipment storage, and as a cabinet shop.
19
12:19-24.
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1701 Property terminated on March 31, 2006, the day before the
21
Company withdrew from the Pension Fund.
22
13.4
23
Lindquist has leased the 1701 Property to a construction
24
management firm, 1701 Associates, Inc., owned by Lindquist and
25
his daughter.
28
Lindquist Dep. at
They began leasing the 1701 Property to the Company in
Id. at 12:4-18.
The Company used
Id. at
According to Lindquist, the Company's lease of the
Lindquist Decl. at ¶
Beginning in January 2007 and continuing until the present,
Lindquist Dep. at 24.
In 2005, Lindquist and his wife purchased a ski condominium
26
27
Lindquist's Real Estate Leasing Activities
4
Lindquist filed a declaration in support of his Opposition.
ECF No. 41.
4
("the condominium") from the Company.
2
rented out the condominium from approximately December 2005
3
through March 2006.
4
Id. at 23.
5
Id.
Id. at 22-23.
They
They sold the condominium in May 2006.
Plaintiffs now seek summary judgment against Lindquist in
6
his personal capacity based on his real estate leasing
7
activities.
8
especially his leasing of the 1701 Property to the Company,
9
constitute a "trade or business" under common control with the
They argue that Lindquist's leasing activities,
10
For the Northern District of California
United States District Court
1
Company, and that Lindquist is therefore liable for the
11
Company's withdrawal liability under ERISA's common control
12
provisions.
13
judgment should be denied because material issues of fact exist
14
as to whether his real estate activities amounted to a "trade or
15
business" as of the date of the Company's withdrawal from the
16
Pension Fund on April 1, 2006.
17
contends that the 1701 Property and the condominium were merely
18
"passive investments" at that time.
Mot. at 7-8.
Lindquist argues that summary
Opp'n at 1-8.
Lindquist
Id.
19
20
III. LEGAL STANDARD
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A. Summary Judgment
22
Entry of summary judgment is proper "if the pleadings, the
23
discovery and disclosure materials on file, and any affidavits
24
show that there is no genuine issue as to any material fact and
25
that the movant is entitled to judgment as a matter of law."
26
Fed. R. Civ. P. 56(c).
27
the evidence would require a directed verdict for the moving
28
party.
Summary judgment should be granted if
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251
5
(1986).
2
judgment . . . against a party who fails to make a showing
3
sufficient to establish the existence of an element essential to
4
that party's case, and on which that party will bear the burden
5
of proof at trial."
6
(1986).
7
all justifiable inferences are to be drawn in his favor."
8
Thus, "Rule 56(c) mandates the entry of summary
Anderson, 477 U.S. at 255.
Celotex Corp. v. Catrett, 477 U.S. 317, 322
"The evidence of the non-movant is to be believed, and
9
10
For the Northern District of California
United States District Court
1
IV.
DISCUSSION
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A.
"Withdrawal Liability" Under ERISA
12
Pension plans are federally regulated pursuant to ERISA, 29
13
U.S.C. § 1001 et seq.
14
Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1381-1453, amended ERISA to
15
allow plans to impose proportional liability on withdrawing
16
employers for the unfunded vested benefit obligations of
17
multiemployer plans.
18
Underground Constr. Co., Inc., 31 F.3d 776, 778 (9th Cir. 1994).
19
The MPPAA sought to ensure that if a withdrawing employer's past
20
contributions did not fully fund the obligations that had vested
21
at the time of its withdrawal, then the withdrawing employer
22
would have to pay its proportionate share of the deficit.
23
The Multiemployer Pension Plan Amendments
Carpenters Pension Trust Fund v.
Id.
This system is designed to make employers pay their share
24
of the real cost of pensions by paying a share of the difference
25
between the assets already contributed and the vested benefit
26
liability.
27
Pension Trust Fund, 789 F.2d 691, 694 (9th Cir. 1986).
28
employer withdraws from a multiemployer pension plan, ERISA
Woodward Sand Co., Inc. v. W. Conf. Teamsters
6
When an
requires the withdrawing employer to compensate the pension plan
2
for benefits that have already vested with the employees at the
3
time of the employer's withdrawal.
4
liability" is assessed against the employer to ensure that
5
employees and their beneficiaries are not deprived of
6
anticipated retirement benefits by the termination of pension
7
plans before sufficient funds have been accumulated in the
8
plans.
9
Id.
This "withdrawal
Id.
Under 29 U.S.C. § 1399, the amount of a withdrawing
10
For the Northern District of California
United States District Court
1
employer's withdrawal liability is first computed by the pension
11
plan's sponsor.
12
owed and is entitled, within ninety days of such notice, to ask
13
the sponsor to review any specific matter relating to the
14
determination of the employer's withdrawal liability.
15
§ 1399(c).
16
sponsor relating to the employer's withdrawal liability "shall
17
be resolved through arbitration."
18
The employer is then notified of the amount
29 U.S.C.
"Any dispute" between an employer and the plan
29 U.S.C. § 1401(a)(1).
Arbitration may be initiated "within a 60-day period" after
19
the employer is notified of the sponsor's final determination
20
concerning withdrawal liability (or 120 days after the employer
21
requested the sponsor to review the matter, whichever date is
22
earlier).
23
are not initiated within the time periods prescribed by the
24
statute, "the amounts demanded by the plan sponsor . . . shall
25
be due and owing on the schedule set forth by the plan sponsor."
26
29 U.S.C. § 1401(b)(1).
27
when due, and fails to cure the delinquency within sixty days of
28
notice of the delinquency, the plan sponsor is entitled to
29 U.S.C. § 1401(a)(1).
If arbitration proceedings
If the employer fails to make payment
7
obtain immediate payment of the entire amount of the employer's
2
outstanding withdrawal liability.
29 U.S.C. § 1399(c)(5).
The MPPAA defines "employer" to include not only the entity
3
4
making contributions to the pension plan, but also "trades or
5
businesses (whether or not incorporated)" that are under "common
6
control" with the contributing entity.
7
Under § 1301(b)(1), trades or businesses under common control
8
are therefore considered a single employer under ERISA and are
9
jointly and severally liable for each other's withdrawal
10
For the Northern District of California
United States District Court
1
liability.
11
29 U.S.C. § 1301(b)(1).5
Bd. of Trustees W. Conf. of Teamsters v. Lafrenz,
837 F.2d 892, 893 (9th Cir. 1988).
Under the above framework, in order to impose the Company's
12
13
withdrawal liability on Lindquist as sole proprietor of a real
14
estate operation, two conditions must be satisfied: (1) the real
15
estate operation must be under common control with the Company;
16
and (2) it must qualify as a "trade or business" under §
17
1301(b)(1).
18
Plaintiffs argue that summary judgment is appropriate
19
because the undisputed evidence establishes both of the elements
20
above.
21
control" element needed for joint and several liability is
22
satisfied, as Lindquist was the sole shareholder of the Company
23
and the owner of the real estate operation.
24
Therefore, the only question at issue is whether Lindquist's
25
leasing operation constituted a "trade or business" for the
26
5
27
28
Mot. at 1.
Lindquist does not dispute that the "common
See Opp'n.
Congress enacted § 1301(b)(1) in order "to prevent businesses
from shirking their ERISA obligations by fractionalizing
operations into many separate entities." Teamsters Pension
Trust Fund v. Allyn Transp. Co., 832 F.2d 502, 507 (9th Cir.
1987).
8
purposes of § 1301(b)(1).
Plaintiffs argue that all courts that have considered the
2
3
issue, including the Ninth Circuit, have found summary judgment
4
in favor of the pension fund appropriate where, as here,
5
controlling shareholders in a withdrawing corporation own
6
property that they lease to the corporation.
7
hold otherwise, according to Plaintiffs, would undermine the
8
purpose behind § 1301(b)(1) by allowing business owners to
9
escape withdraw liability by maintaining business assets in
Mot. at 18.
To
10
For the Northern District of California
United States District Court
1
their own name and leasing those assets to the company.6
11
Relying on Central States v. Fulkerson, 238 F.3d 891, 895-95
12
(7th Cir. 2001), Lindquist argues that his involvement with the
13
lease of the 1701 Property was so minimal as to render the lease
14
a "passive investment" rather than a trade or business.
15
at 4-7.
16
B.
17
ERISA does not contain a definition of the term "trade or
Id.
Opp'n
"Trade or Business" Under 29 U.S.C. § 1301(b)(1)
18
business."
Lafrenz, 837 F.2d at 894 n.6.
Section 1301(b)(1)
19
provides that the phrase "trades or businesses (whether or not
20
incorporated) which are under common control" has the same
21
meaning as that provided in the regulations promulgated under
22
section 414(c) of the Internal Revenue Code.
23
business" is not clearly defined in either section 414(c) or the
However, "trade or
24
6
25
26
27
28
Plaintiffs also argue briefly that Lindquist's leasing of the
ski condominium and the manner in which Lindquist claimed
deductions on his tax returns further support the conclusion
that his leasing activities were a trade or business under
ERISA. The Court does not address these arguments because it
finds Lindquist's lease of the 1701 Property to the Company
sufficient to establish liability.
9
regulations promulgated thereunder.
2
qualify as a "trade or business" is essentially a factual
3
inquiry.
4
inquiry, courts look to Congress's purpose in enacting §
5
1301(b)(1): "to prevent the controlling group of a company from
6
avoiding withdrawal liability by shifting corporate assets into
7
other business ventures under its control."
9
Id.
Lafrenz, 837 F.2d at 894 n.6.7
Whether activities
To guide this factual
Id. at 894.
The facts of Lafrenz closely parallel those of the instant
8
case.
In Lafrenz, a pension plan was unable to collect
10
For the Northern District of California
United States District Court
1
withdrawal liability from a withdrawn corporation because the
11
corporation declared bankruptcy.
12
therefore sued Stanley and Anita Lafrenz, who owned ninety-six
13
percent of the corporation's outstanding shares and also owned
14
two dump trucks, which they leased to the corporation for
15
profit.
16
operation was a "trade or business" under common control with
17
the corporation because the Lafrenzes owned both.
18
court granted summary judgment in favor of the pension fund,
19
holding the Lafrenzes personally liable for the withdrawal
Id.
Id.
The pension plan
The district court held that the truck-leasing
Id.
The
20
21
7
22
23
24
25
26
27
28
Lindquist urges the Court to apply the definition of "trade or
business" used by the Supreme Court when interpreting a
different provision of the Internal Revenue Code, and
subsequently used by the Seventh Circuit in a withdrawal
liability case like this one. See Comm'r of Internal Revenue v.
Groetzinger, 480 U.S. 23, 35 (1987); Fulkerson, 238 F.3d at 89595. For an activity to be a trade or business under the
Groetzinger test, a person must engage in the activity: (1) for
the primary purpose of income or profit; and (2) with continuity
and regularity. 480 U.S. at 35. The second prong of the
Groetzinger test distinguishes between active and passive
investments. Fulkerson, 238 F.3d at 895-95. However, the Ninth
Circuit has not adopted this approach, and the Court declines to
do so here. Lafrenz, 837 F.2d at 894.
10
liability because they were sole proprietors of the truck
2
leasing operation.
Id.
3
On appeal, the Lafrenzes argued, as Lindquist does here,
4
that their truck-leasing operation should not be considered a
5
trade or business because it was a passive investment.
6
894.
7
statute does not distinguish between active and passive
8
investments.8
9
cases holding that a proprietorship which leased property to a
10
For the Northern District of California
United States District Court
1
commonly controlled corporation was a trade or business under §
11
1301(b)(1).
12
Supermarkets, 644 F. Supp. 633, 638 (D.N.J. 1986), and Pension
13
Benefit Guar. Corp. v. Ctr. City Motors, 609 F. Supp. 409, 412
14
(S.D. Cal. 1984)).
15
trucks, arranged for the truck leases and admittedly leased the
16
trucks for profit.
17
truck-leasing operation a 'trade or business' under the sweeping
18
language of the statute."
Id. at
The Ninth Circuit rejected this argument, noting that the
The Court cited with approval two district court
Id. at 895 (citing United Food v. Progressive
The Court stated: "[t]he Lafrenzes own the
That is plainly sufficient to make the
837 F.2d at 894.
Here, the undisputed evidence shows that Lindquist leased
19
20
the 1701 Property to the Company for nearly seven years and
21
received $2,000 per month in revenue from the leasing
22
arrangement.
23
simply no significant basis for distinguishing this case from
24
Lafrenz or a multitude of other cases that have uniformly found
Lindquist Dep. at 11:2-25, 12:1-5.
There is
25
8
26
27
28
In a footnote the court acknowledged that some type of "passive
investments" might exist that would not qualify as a trade or
business: "[w]e do not hold that every 'passive investment' is
necessarily a trade or business. We hold only that the facts in
this case justify the conclusion that the truck-leasing
operation is a trade or business." Id. at 895 n.7.
11
property leases between two commonly controlled entities to
2
constitute a trade or business under § 1301(b)(1).
3
Ctr. City Motors, 609 F. Supp. at 412 ("[T]he court finds that
4
Congress did not intend to exclude from its definition of a
5
'trade or business' in § 1301, a rental proprietorship which
6
leases property, under a net lease, to an entity that is under
7
common control."); Cent. States S.E. & S.W. Areas Pension Fund
8
v. Ditello, 974 F.2d 887, 890 (7th Cir. 1992) ("Federal courts
9
reaching this issue, including this circuit, have uniformly held
See, e.g.,
10
For the Northern District of California
United States District Court
1
that leasing property to a withdrawing employer is a 'trade or
11
business' for purposes of section 1301(b)(1)."); Vaughn v.
12
Sexton, 975 F.2d 498, 503 (8th Cir. 1992) (family trust that
13
leased real property to withdrawing entity was a trade or
14
business under ERISA).
15
contrary.9
16
§ 1301(b)(1) by allowing controlling shareholders to evade
17
withdrawal liability by maintaining property under separate
18
ownership and leasing it to the company.
Indeed, to hold otherwise would thwart the purpose of
Lindquist seeks to distinguish Lafrenz on the ground that
19
20
Lindquist provides no authority to the
the extent of his leasing activity "was so minimal as to make
21
9
22
23
24
25
26
27
28
Lindquist's reliance on Fulkerson is misplaced. In Fulkerson,
the Seventh Circuit applied the Groetzinger test for "trade or
business" and found that the defendants' leasing activities were
too passive to qualify as a trade or business under §
1301(b)(1). 238 F.3d at 895. The court explained that the
defendants' mere holding of real property leases -- without
taking actions such as negotiating the leases, researching
properties, or maintaining the properties -- constituted a
passive investment akin to owning stocks or commodities. Id.
As noted above, the Ninth Circuit has not adopted the
Groetzinger test. Moreover, unlike in this case, the defendants
in Fulkerson did not lease property to the withdrawing employer.
Id. at 893.
12
the investment passive."
2
in Lafrenz acknowledging that some passive investments may not
3
be considered a trade or business.
4
argument, Lindquist declares that he "spent less than 5 hours
5
per year related to the 1701 investment" and that the Company
6
"took care of all operations at the property."
7
¶ 12.
8
to the Company terminated the day before the Company withdrew
9
from the pension plan.
10
For the Northern District of California
United States District Court
1
Opp'n at 5-6.
Id.
He points to a footnote
In support of his
Lindquist Decl.
He further declares that the lease of the 1701 Property
Id. ¶ 13.
Even assuming the truth of these assertions, Lindquist has
11
provided no significant basis for distinguishing his case from
12
Lafrenz or the multiplicity of other district and appellate
13
cases that have found leasing property to a withdrawing employer
14
to be a trade or business under ERISA.
15
Company, rather than Lindquist personally, took care of the 1701
16
Property is immaterial.
17
in United Food, "the fact that one of the entities bore nearly
18
all the responsibilities under the lease [does] not insulate the
19
other from being treated as a 'trade or business' for purposes
20
of § 1301(b)(1)."
21
Ctr. City, 609 F. Supp at 612).
22
First, the fact that the
As stated in Center City and reiterated
United Food, 644 F. Supp. at 639 (quoting
Second, the fact that the lease terminated the day before
23
the Company's withdrawal similarly does not alter the Court's
24
analysis.
25
terminated more than four months before its withdrawal from the
26
pension fund, but the court did not find this to be a
27
significant factor in determining whether the defendant's
28
leasing activities were a trade or business under ERISA.
In United Food, the withdrawing entity's lease
13
644 F.
Supp. at 639; see also Cent. States S.E. and S.W. Areas Pension
2
Fund v. Pers., Inc., 974 F.2d 789 (7th Cir. 1992) (leasing
3
property to employer qualified as trade or business even though
4
lease expired almost two years before withdrawal).
5
finds the same here.
6
the lease's termination should be relevant to the "trade or
7
business" inquiry.
8
that the common control element of the analysis must be
9
determined as of the date of withdrawal.
The Court
Lindquist does not explain why the date of
He cites to out-of-circuit authority stating
See Opp'n at 2 (citing
10
For the Northern District of California
United States District Court
1
IUE AFL-CIO Pension Fund v. Barker & Williamson, 788 F.2d 118,
11
125 (3rd Cir. 1986)).
12
dispute that Lindquist owned both the company and the real
13
estate operation on the date of withdrawal.
14
rule proposed by Lindquist, employers could avoid group
15
liability by simply terminating their leases the day before
16
withdrawing from the pension fund.
17
purpose of the statutory scheme.
18
Barker is inapposite, as there is no
Moreover, under the
This would undermine the
Last, the fact that Lindquist spent fewer than five hours
19
per year "related to the 1701 investment" is also irrelevant.
20
It is unclear what Lindquist means by this statement.
21
presumably provides this information because the Fulkerson court
22
held that a lease in that case was a passive investment in part
23
because the lessor "averred that he never spent more than five
24
hours in a year dealing with the lease or the leased
25
properties."
26
Fulkerson is inapposite because the defendant in that case,
27
unlike here, did not lease property to the withdrawing employer.
28
Lindquist concedes that the Company, of which he was the sole
238 F.3d at 896.
He
However, as noted above,
14
shareholder, made extensive use of the 1701 Property, using it
2
as office space, storage space, and a cabinet shop.
3
Dep. at 11-12.
4
activities related to the property does not transform his
5
leasing operation from a trade or business into a passive
6
investment.
7
Lindquist
The amount of time spent by Lindquist himself on
In short, while Lafrenz does indicate that there are some
8
types of investments that might be too "passive" to qualify as a
9
trade or business under ERISA, leasing property to a withdrawing
10
For the Northern District of California
United States District Court
1
entity is certainly not one of them.
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stocks or bonds in publicly traded companies, which, for
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example, might properly be considered passive investments beyond
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the scope of § 1301(b)(1), Lindquist's leasing operation poses
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precisely the type of fractionalization threat that § 1301(b)(1)
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was designed to address.
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Unlike the purchase of
Accordingly, the Court GRANTS summary judgment in favor of
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Plaintiffs.
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C.
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ERISA provides that "[i]n any action under this section to
Remedy
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compel an employer to pay withdrawal liability, any failure of
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the employer to make any withdrawal liability payment within the
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time prescribed shall be treated in the same manner as a
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delinquent contribution . . . ."
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action to enforce payment of delinquent contributions, a
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plaintiff is entitled to recover the unpaid contributions,
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interest, liquidated damages, and reasonable attorneys' fees and
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costs.
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Pension Trust Fund v. Clarke's Welding, Inc., 688 F. Supp. 2d
29 U.S.C. § 1132(g)(2).
29 U.S.C. § 1451(b).
In an
See also Operating Eng'rs
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902, 914 (N.D. Cal. 2010).
1.
2
Liquidated Damages
ERISA section 502(g)(2)(C) authorizes a liquidated damages
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4
award pursuant to the terms of the pension plan in an amount not
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in excess of twenty percent of the total withdrawal liability.
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29 U.S.C. § 1132(g)(2)(C)(ii).
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that "the amount of damage to the Fund and the Pension Plan
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resulting from any failure to promptly pay shall be presumed to
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be the sum of $20.00 per delinquency or 10% of the amount of the
Here, the pension plan provided
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For the Northern District of California
United States District Court
1
Contribution or Contributions due, whichever is greater."
Price
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Decl. ¶ 16; Aug. 1, 2006 Letter.
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liquidated damages equal to ten percent of the total withdrawal
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liability amount of $954,508, amounting to a total of $95,450.80
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in liquidated damages.
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2.
Accordingly, Plaintiffs seek
Interest
ERISA Section 502(g)(2)(B) provides that interest on unpaid
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17
contributions shall be determined based on the rate provided
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under the plan, or, if none, the rate prescribed under section
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6621 of the Internal Revenue Code.
20
Here, the plan provides that interest on past due withdrawal
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liability shall be calculated using the California statutory
22
rate of ten percent for unpaid judgments.
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Cal. Code Civ. Proc. § 685.010.
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total interest owed from October 1, 2006 through the filing of
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this Motion on March 31, 2010 to be $429,397.85.
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17.
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October 1, 2006 as the starting date for the interest
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calculation.
29 U.S.C. § 1132(g)(2)(B).
Price Decl. ¶ 17;
Plaintiffs have calculated the
Price Decl. ¶
However, Plaintiffs have not explained why they used
Plaintiffs shall file a supplemental declaration
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with the Court explaining the basis for using October 1, 2006 as
2
the start date for interest accrual.
3.
3
Attorneys' Fees and Costs
ERISA section 502(g)(2)(D) entitles Plaintiffs to an award
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5
of reasonable attorneys' fees and costs.
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1132(g)(2)(D).
7
attorneys' fees and costs but assert that they will move for
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fees and costs if judgment is awarded in their favor.
9
29 U.S.C. §
23.
Plaintiffs must do so within thirty days.
V.
CONCLUSION
Plaintiffs have not provided a statement of
Mot. at
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For the Northern District of California
United States District Court
1
11
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The Court GRANTS the Motion for Summary Judgment filed by
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Plaintiffs Carpenters Pension Trust Fund of Northern California
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and Board of Trustees of the Carpenters Pension Trust Fund for
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Northern California and against Defendant Mark Alan Lindquist,
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in the amount of $954,508.00 in unpaid principal withdrawal
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liability, $95,450.80 in liquidated damages, and applicable
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interest in an amount to be determined.
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of this Order, Plaintiffs shall: (1) file a declaration with the
20
Court explaining why the start date for interest accrual should
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be October 1, 2006; and (2) file a motion for attorneys' fees
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and costs.
Within thirty (30) days
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IT IS SO ORDERED.
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Dated: July 19, 2011
UNITED STATES DISTRICT JUDGE
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