Central Laborers' Pension, Welfare and Annuity Funds et al v. Alliance Commercial Concrete Inc et al
Filing
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OPINION: The Plaintiffs' Motion for Summary Judgment against Defendant Alliance Concrete Construction, L.L.C. as to Counts II and V [d/e 48] is ALLOWED. Judgment will be entered on Count II in the amount of $10,094.50 and $370,028.19 on Count V. See written Opinion. Entered by Judge Richard Mills on 12/19/2011. (MJ, ilcd)
E-FILED
Monday, 19 December, 2011 05:08:59 PM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
CENTRAL LABORERS’ PENSION
FUND, et al.,
Plaintiffs,
v.
ALLIANCE COMMERCIAL
CONCRETE, INC., ALLIANCE
CONCRETE CONSTRUCTION,
LLC, ALLIANCE FOUNDATION,
INC.,
Defendants.
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NO. 08-3065
OPINION
RICHARD MILLS, U.S. District Judge:
Pending before the Court is the Plaintiffs’ Motion for summary
judgment.
I. INTRODUCTION
This action is brought pursuant to the Labor Management Relations
Act, as amended, 29 U.S.C. § 185(a), and the Employee Retirement
Security Act of 1974 (ERISA), as amended 29 U.S.C. § 1001 et seq.
PlaintiffS Central Laborers’ Pension, Welfare, and Annuity Funds, et al.
seek the entry of summary judgment against Defendant Alliance Concrete
Construction, L.L.C. (“ACCL”), for two counts of the Plaintiffs’ Complaint.
Count II of the Complaint sought a payroll audit of ACCL and, if
delinquent contributions were identified, payment of those contributions.
Count V sought judgment against ACCL as a successor to Alliance
Foundations, Inc. (“AFI”), for contributions owed by AFI. On May 31,
2011, the Court entered judgment against AFI in the amount of
$370,028.19 for past due fringe benefit contributions, liquidated damages,
and audit costs.
The Plaintiffs now seek judgment against ACCL in the amount of
$10,094.50 for audit liabilities, liquidated damages, and audit costs for the
audit completed of ACCL and $370,028.19 for past due fringe benefit
contributions, liquidated damages, and audit costs resulting from an audit
of AFI based on the theory of successor liability.
II. FACTUAL BACKGROUND1
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These facts are taken from the Plaintiffs’ alleged undisputed material facts. As
the Plaintiffs assert in their reply brief, ACCL’s response is not consistent with the
local rules. By failing to properly respond to the Plaintiffs’ numbered facts, ACCL
has admitted those facts. See CDIL-LR 7.1(D)(2)(b)(6).
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The Plaintiffs are employee benefit funds administered pursuant to
the terms and provisions of certain Agreements and Declarations of Trust
and are required to be maintained in accordance with the provisions of the
Labor Management Relations Act of 1947 and the ERISA. ACCL is a
concrete construction contractor and thus is an Employer engaged in an
industry within the meaning of ERISA, 29 U.S.C. § 1002(5), (11), (12),
and (14). The Defendant has employed individuals who are members of
Local Union No. 309 Laborers’ International Union of North America and
said individuals are participants in the Plaintiffs’ employee benefit funds.
ACCL filed its Articles of Incorporation on March 28, 2005. ACCL
is owned by Allied Investment Group, L.L.C., which was incorporated on
March 11, 2005. At the time Allied Investment was incorporated, Michael
Wardlow owned one-third of the company. Wardlow now owns 50% of
Allied Investment Group.
AFI was a concrete construction contractor which was incorporated
in Iowa on January 22, 2002. AFI was owned by Jack Laud and Mike
Wardlow. Laud and Wardlow served as officers of AFI but only Wardlow
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was a director of AFI. AFI ceased operations in March of 2005 and was
involuntarily dissolved by the Iowa Secretary of State on August 7, 2006.
Alliance Commercial Concrete, Inc. (ACCI) was a concrete
construction contractor which was incorporated in Iowa on December 12,
2002. ACCI was owned by Jack Laud and Mike Wardlow and both served
as officers and directors of the company. ACCI stopped operating in March
of 2005.
Mike Wardlow is currently a general manager of ACCL and has
supervised its operations since its incorporation.
ACCL received
equipment, vehicles and tools of the trade from AFI and ACCI. At the time
of its incorporation, ACCL, through its members or managers, knew that
the Plaintiffs had made a demand to ACCI for payments of delinquent
contributions owed to the Plaintiffs. Although ACCL has not signed a
labor agreement, it has submitted report forms and made contributions to
the Plaintiffs since it began operations in April of 2005.
ACCL has agreed to two payroll compliance examinations requested
by the Plaintiffs since April of 2005. The first exam of ACCL covered the
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period of October of 2005 through December 31, 2006. The report for the
first examination was issued on March 6, 2007, and found contributions
owed of $725.95. The second report for ACCL covered the period of
October of 2005 through December of 2009. The second report was issued
on April 23, 2010, and found $10,094.50 was due for employer
contributions to the Plaintiffs. The Plaintiffs forwarded that report to
ACCL’s attorney on May 19, 2010, with a demand for payment.
ACCL presented several challenges to the report.
However, the
Plaintiffs requested more information on some of the challenges and the
ACCL never responded to the request. During the period that ACCI was
in operation, it had signed several labor agreements including a highway
construction agreement on May 30, 2003, and a building construction
agreement on June 24, 2003. ACCI had also agreed to a payroll compliance
examination requested by the Plaintiffs. On November 14, 2005, a report
was issued for contributions offered by ACCI.
That report showed
contributions due of $8,288.60. ACCI paid the amounts listed in the
report. While conducting the examination of ACCL, the field examiners
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identified several laborers who were performing residential work; however,
the examiners were refused access to any other records regarding residential
work.
III. DISCUSSION
A. Legal standard
The Plaintiffs claim they are entitled to summary judgment.
Summary judgment is appropriate if the motion is properly supported and
“there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” See Fed. R. Civ. P. 56(a). The
Court construes all inferences in favor of the non-movant. See Siliven v.
Indiana Dept. of Child Services, 635 F.3d 921, 925 (7th Cir. 2011).
B. Audit report liability for ACCL
The Plaintiffs claim that ACCL is liable for $10,094.50 for the
contributions owed as identified in the report issued on April 23, 2010.
They assert that although ACCL has never formally signed a collective
bargaining agreement, it is a successor company to ACCI which had two
agreements in effect with the Laborers’ and which required contributions
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to the Plaintiff’s funds.
Moreover, ACCL has adopted the applicable
agreements pursuant to its course of conduct. Specifically, the Plaintiffs
state that ACCL has submitted contribution reports to the Plaintiffs since
April of 2005 through November of 2011. Moreover, it agreed to a payroll
compliance examination before this lawsuit and it cooperated with the
examination requested as part of this lawsuit.
Additionally, ACCL
submitted several challenges to the report thereby waiving any arguments
that Plaintiffs lacked the authority to conduct the audit or seek the
contributions identified in the report.
The Plaintiffs further assert that ACCL is a successor to ACCI. Mike
Wardlow was an owner of ACCI and became a 50% owner of ACCL.
ACCL took over ACCI’s Federal Employer Identification Number. It also
took possession of ACCI’s equipment, tools, and vehicles. Some of the
same employees worked at both entities.
Until March of 2005,
contribution reports were submitted in ACCI’s name; subsequently, they
were submitted in ACCL’s name. Citing Line Construction Benefit Fund
v. Allied Electrical Contractors, Inc., 591 F.3d 576, 578 (2010), the
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Plaintiffs note that an entity can by course of conduct demonstrate its
assent to be bound by the applicable collective bargaining agreements.
Conduct that manifests such agreement may include “the payment of union
wages, the remission of union dues, the payment of fringe benefit
contributions, the existence of other agreements evidencing assent and the
submission of the employer to union jurisdiction, such as that created by
grievance procedures.” Id. at 580 (citations omitted).
The Plaintiffs claim that in this case, Mike Wardlow testified that he
hired laborers out of the local hall and paid the prevailing wage and fringe
benefits for these laborers. Moreover, the contribution reports submitted
by ACCL for the period of April of 2005 through November of 2010 show
not only the payment of fringe benefits but the calculation of dues payment
for remittance to Laborers’ Local 309. Additionally, ACCL showed assent
by agreeing to a payroll compliance examination for the period of October
of 2005 through December of 2006.
The Plaintiffs contend that there is no factual dispute that ACCL is
liable to the Plaintiffs for the contributions identified in the report issued
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on April 23, 2010.
The Plaintiffs seek judgment in the amount of
$10,094.50.
ACCL’s response consists of a number of statements and legal
conclusions that are not supported by references to the record. There is a
reference to Mike Wardlow’s affidavit and other exhibits attached to the
memorandum. However, the response does not include any legal argument,
as is required by the local rules. See CDIL-LR 7.1(D)(2)(c).
As the Plaintiffs contend, a party cannot defeat summary judgment
by making a number of unsupported allegations and attaching an affidavit
and other exhibits to the response. In Waldridge v. American Hoechst
Corp., 24 F.3d 918 (7th Cir. 1994), the United States Court of Appeals for
the Seventh Circuit rejected a plaintiff’s argument that there was sufficient
evidence in the record for the court to determine that summary judgment
was not warranted, notwithstanding the plaintiff’s failure to comply with
the local rules. See id. at 923. The court declined to sift through the
exhibits attached to the plaintiff’s motion, stating that if a party failed to
properly support its pleading, “the court should not have to proceed
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further, regardless of how readily it might be able to distill the relevant
information from the record on its own.” Id.
Because ACCL has failed to properly respond to the Plaintiffs’ factual
allegations or legal argument, the Court concludes that summary judgment
is warranted on the Plaintiff’s claim based on audit report liability.
C. Successor liability of ACCL
Count V alleged that ACCL is the successor company to AFI and is
therefore liable for the audit liabilities, liquidated damages, and audit costs
owed by AFI. The Plaintiffs seek the entry of summary judgment. A
successor company is liable for the fringe benefit contributions of its
predecessor if “(1) there is sufficient continuity between the two companies
and (2) the successor company had notice of the predecessor’s liability.”
Moriarty v. Svec, 164 F.3d 323, 327 (7th Cir. 1998). Factors which may
establish a continuity of operations include use of the same management,
supervisory personnel and employees; the production of the same products;
the fulfillment of previous commitments or obligations undertaken by the
predecessor; and use of the same equipment. See Upholsters’ Inter. Union
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Pension Fund v. Artistic Furniture of Pontiac, 920 F.2d 1323, 1329 (7th
Cir. 1990).
The Plaintiffs allege that the several factors support their contention
that ACCL is AFI’s successor. Mike Wardlow owned a 50% share in AFI
and currently owns a 50% share in the parent company which owns ACCL.
Both ACCL and AFI are in the same business of concrete construction.
Moreover, Wardlow has managed or supervised the daily operations of both
entities. Some of the same employees or supervisors have worked at both
ACCL and AFI. The Plaintiffs further state that ACCL also received tools
of the trade, vehicles, and other equipment from AFI. They assert that
Wardlow testified the primary reason for the transition from AFI to ACCL
was because AFI (and ACCI) were unable to pay their debts to the lending
institutions. ACCL assumed the bank notes initially executed by AFI.
The Plaintiffs further allege that ACCL had notice of its predecessor’s
fringe benefit liability. Mike Wardlow has been employed as an owner and
manager of the predecessor and successor companies. Central Laborers
became aware of AFI through payroll records provided by an employee (and
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a member of Laborers’ Local 309), which demonstrated that AFI would also
be required to pay fringe benefits. The employee alleged that he frequently
worked on commercial projects, for which AFI would be required to pay
fringe benefit payments. The payroll records show the employee also
worked for ACCI. However, no contributions were ever paid on his behalf
for this work. Moreover, there is no evidence that fringe benefit payments
were paid for other ACCI employees who sometimes worked for AFI. The
Plaintiffs contend that AFI was used to avoid paying fringe benefits
required by the agreements executed by ACCI. The Plaintiffs contend that
Wardlow would obviously have known this.
The Plaintiffs further assert that, although Wardlow may not have
known the extent of AFI’s liabilities at the time of the transition to ACCL,
AFI never contested the complaint against it. AFI had the right to contest
the lawsuit and the results of the payroll audit. Neither AFI nor Wardlow
contested the lawsuit.
Like the allegations in support of the summary judgment motion as
to Count I, the Plaintiffs’ assertions with respect to successor liability have
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not been properly disputed. Therefore, the Court concludes that Plaintiffs
have shown that ACCL was a continuation of operations of AFI and ACCL
had notice of the liabilities of AFI. Accordingly, ACCL shall be held liable
for contributions, audit costs, and liquidated damages assessed in the
default judgment against AFI.
IV. CONCLUSION
For the foregoing reasons, the Plaintiffs’ Motion for summary
judgment against ACCL as to Counts II and V will be Allowed. Judgment
will be entered in the amount of $10,094.50, for audit liabilities, liquidated
damages, and audit costs for the audit completed of ACCL, pursuant to
Count II. On Count V, judgment will be entered against ACCL in the
amount of $370,028.19 on the theory of successor liability, for past due
fringe benefit contributions, liquidated damages, and audit costs resulting
from an audit of AFI.
Ergo, the Plaintiffs’ Motion for summary judgment against Defendant
Alliance Concrete Construction, L.L.C. as to Counts II and V [d/e 48] is
ALLOWED.
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Judgment will be entered on Count II in the amount of $10,094.50
on Count II and $370,028.19 on Count V.
The Court previously Directed that Judgment be entered in favor of
the Plaintiffs as to Defendant Alliance Foundation, Inc., in the amount of
$370,028.19.
On July 14, 2011, the Court further Directed that
Defendants Alliance Foundation, Inc. and Alliance Commercial Concrete,
Inc. be Ordered to pay $19,219.63 in attorneys’ fees and costs. The
Plaintiffs are Directed to submit an updated request for fees and costs
within fourteen (14) days of the entry of this Order.
ENTER: December 19, 2011
FOR THE COURT:
s/Richard Mills
United States District Judge
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