Central Laborers' Pension Fund et al v. AEH Construction, Inc. et al
Filing
60
OPINION: Plaintiffs' Motion for Summary Judgment (d/e 45 ) and Defendant Mid-West's Motion for Summary Judgment (d/e 44 ) are DENIED. This case is set for a Final Pretrial Conference on December 7, 2015 at 3:00 p.m. The parties are rem inded to comply with Local Rule 16.1, including Rule 16.1(E)(7) (requiring the parties submit an agreed set of findings of fact and conclusions of law) and Rule 16.1(F) (prepare the proposed final pretrial order). The proposed final pretrial order shall be filed by noon on December 3, 2015. A date for the bench trial shall be scheduled at the Final Pretrial Conference. Entered by Judge Sue E. Myerscough on 10/29/2015. (ME, ilcd)
E-FILED
Friday, 30 October, 2015 02:40:38 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, CENTRAL )
LABORERS' SUPPLEMENTAL PENSION FUND,
)
CENTRAL LABORERS' WELFARE FUND,CENTRAL )
LABORERS' RETIREE WELFARE FUND, CENTRAL)
LABORERS' ANNUITY FUND, CENTRAL
)
LABORERS' ANNUITY PREMIUM FUND, ILLINOIS )
LABORERS' AND CONTRACTORS' JOINT
)
APPRENTICESHIP & TRAINING PROGRAM,
)
NORTH CENTRAL ILLINOIS LABORERS'
)
HEALTH & WELFARE FUND, CENTRAL ILLINOIS )
LABORERS'-EMPLOYERS' COOPERATIVE
)
EDUCATION TRUST, NORTH CENTRAL ILLINOIS )
LABORERS'-EMPLOYERS' COOPERATIVE
)
EDUCATION TRUST, NORTH CENTRAL ILLINOIS )
MIDWEST REGIONAL ORGANIZING COMMITTEE, )
NORTH CENTRAL ILLINOIS MARKET
)
PRESERVATION FUND, LABORERS' OF ILLINOIS )
VACATION FUND, SOUTHERN AND CENTRAL
)
VACATION FUND, CENTRAL ILLINOIS LEGAL
)
SERVICES FUND, SUBSTANCE ABUSE TESTING )
FUND, LABORERS' LOCAL 362, and LABORERS' )
LOCAL 538,
)
)
Plaintiffs,
)
)
v.
) No. 14-3052
)
AEH CONSTRUCTION, INC., and MID-WEST
)
ILLINOIS CONCRETE CONSTRUCTION, INC.,
)
)
Defendants.
)
OPINION
SUE E. MYERSCOUGH, U.S. District Judge.
Page 1 of 25
This cause is before the Court on the parties’ cross-motions for
summary judgment. See d/e 44; d/e 45. Because genuine issues
of material fact remain, the Motions are DENIED.
I. PROCEDURAL BACKGROUND
Plaintiff Central Laborers’ Pension Fund serves as the
collection agent for the other named Plaintiffs, which are multiemployer fringe benefit funds, labor organizations, labormanagement committees and/or funds established pursuant to
collective bargaining agreements between the Laborers’
International Union of North America and certain employer
associations whose employees are covered by said collective
bargaining agreements. In February 2014, Plaintiffs filed a lawsuit
against AEH Construction, Inc. (AEH) and Mid-West Illinois
Concrete Construction, Inc. (Mid-West) under the Employee
Retirement Income Security Act of 1974 (ERISA). The lawsuit
alleges that AEH failed to pay certain contributions on behalf of
employees who are members of the union and participants in
Plaintiffs’ employee benefit funds. See Complaint (d/e 1). In Count
I, Plaintiffs allege that AEH owes audit liabilities, delinquent
contributions, report form shortages, liquidated damages, and audit
Page 2 of 25
costs in the amount of $22,001.16, as well as other unpaid
contributions and liquidated damages found owing at the time
judgment is rendered. Count II alleges that Mid-West, as the
successor company to AEH, is liable for the delinquent
contributions and costs owed by AEH.
In June 2014, Plaintiffs obtained a default judgment against
AEH. See Order of Default Judgment (d/e 22); see also Opinion
(d/e 47) (amending June 20, 2014 Order of Default Judgment to
include language that there was no just reason to delay in the entry
of a final judgment on the Order of Default Judgment nunc pro
tunc). The Court awarded Plaintiffs a total of $25,391.66, which
consisted of audit liabilities, delinquent contributions, report form
shortages, liquidated damages, and audit costs in the amount of
$22,001.16, reasonable attorney’s fees in the amount of $2,953.50,
and costs in the amount of $437. The case remained pending
against Mid-West.
In August 2015, Plaintiffs and Mid-West each filed Motions for
Summary Judgment. Plaintiffs assert that the undisputed material
facts show that Mid-West is the successor of AEH. Mid-West
Page 3 of 25
asserts that the undisputed material facts show that Mid-West is
not the successor of AEH.
II. FACTS
The following facts are taken from the parties’ statements of
undisputed facts and other evidence in the record. Where a fact
relied on is not contained in a party’s statement of undisputed fact,
the Court cites the record.
A.
Facts Pertaining to the Formation and Operation of AEH
AEH was a construction company that was formed on April 4,
1983 and was involuntarily dissolved by the Illinois Secretary of
State on August 8, 2014. AEH operated from a building it owned
at 1920 Lacon Drive, Galesburg, Illinois.
AEH performed various types of construction including
miscellaneous concrete construction, curb and gutter work,
intersections, base pavements, driveway pavements, sidewalks,
road patches, and bridge deck sealing. Mid-West asserts that this
list is not exhaustive and that AEH also put scales in two scale
houses. Moreover, the vast majority of road patch work performed
by AEH was considered heavy patch work in the construction
industry, was normally performed on interstates, and took a crew of
Page 4 of 25
between 15 and 25 employees between 2 weeks and 2 months to
complete. AEH also performed snow removal services during the
winter months for Cottage Hospital, Hy-Vee, and Kerasotes Theaters
(now AMC). For the last few years AEH was in operation, AEH
performed more bridge deck sealer projects and fewer concrete
projects. Hensley Dep. at 17-18 (d/e 45-10).
Thomas Hensley was the president, secretary, and treasurer of
AEH, as well as the sole shareholder and director. Hensley, as
president of AEH, signed a Memorandum of Agreement with North
Central Illinois Laborers’ District Council, which included Local
Unions Nos. 32, 82, 109, 165, 231, 287, 309, 362, 393, 422, 538,
727, 751, 852, 911, 991, 996, and 1203, and covered both
“building” and “heavy/highway” work. In his role as president of
AEH, Hensley spent most of his time doing paperwork, estimating
contracts, and filling out required forms for bids. Henlsey Dep. at
16.
Although Plaintiffs assert it is immaterial, Plaintiffs do not
dispute that in 2010, AEH employed 105 persons through the year.
Hensley testified that AEH had six or seven full-time employees and
the rest came from the union hall as needed. Hensley Dep. at 14.
Page 5 of 25
Those regular employees included Jeff Hughes, Cory Storm, Michael
Hensley, Terry Jackson Sr., Terry Jackson, Jr., and an individual
named John. Hensley Dep. at 15. The parties do not dispute that
AEH employed, among others, Cory Storm, Michael Hensley, Terry
Jackson, Sr., Terry Jackson, Jr., and Roy Matthews. AEH remitted
contributions to Plaintiffs on behalf of the following Laborers’ Local
538 members: Cory Storm, Michael Hensley, and Terry Jackson, Jr.
Plaintiffs also assert that AEH’s revenue is immaterial but
admit that AEH had gross revenue of $2,437,217 in 2010 and
$2,301,351 in 2011. AEH did not file a corporate tax return for
2012. Hensley Second Supp. Aff. ¶ 1 (d/e 53-1).
B.
Facts Pertaining to the Formation and Operation of MidWest
Mid-West is a construction company that was formed on April
4, 2013. Mid-West performs various types of construction,
including miscellaneous concrete construction, curb and gutter
work, approaches, patios, garage floors, driveway pavements,
sidewalks. Mid-West also performed one bridge deck sealing
project. The road patch work performed by Mid-West is considered
light patch work in the construction industry and is performed
Page 6 of 25
mainly for utilities. The work takes a crew of 1 to 2 employees
between 2 hours a day to complete. Mid-West has also performed
snow removal services during the winter months for Cottage
Hospital, Hy-Vee, and Kerasotes Theaters (now AMC).
Hensley is the president of Mid-West. Mid-West operates out
of Hensley’s residence in Galesburg, Illinois. Hensley works in the
field but still does the bid work and estimating. Hensley Aff. at 37.
Deborah Richison (Hensley’s sister) is the secretary and
treasurer of Mid-West and is identified as the sole owner of MidWest, as well as the holder of all of the corporate stock. However,
Plaintiffs dispute that Richison is the actual owner of Mid-West and
argue instead that she is a strawman/figurehead owner. The
parties dispute the amount of money Richison personally invested
into the company.
Richison has not received any corporate distributions or
compensation as an officer. Hensley received compensation for
being an officer of Mid-West in 2013, 2014, and 2015. Hensley, as
president of Mid-West, personally guaranteed all of the loans MidWest had with Tompkins State Bank. Hensley also took out a home
equity line of credit and used his personal credit for Mid-West.
Page 7 of 25
Hensley, as president of Mid-West, signed a “heavy/highway”
collective bargaining agreement with Laborers’ Local 538, a
“heavy/highway” collective bargaining agreement with Laborers’
Local 165, a Memorandum of Agreement with Laborers’ Local 231,
which covers both “building” and “heavy/highway” work, and a
“heavy/highway” collective bargaining agreement with Laborers’
Local 309.
Although Plaintiffs assert it is immaterial, Plaintiffs do not
dispute that in 2013, Mid-West employed 21 individuals through
the year. In 2014, Mid-West employed 29 individuals through the
year.
It is undisputed that Mid-West has, or has had, employees
who were employees of AEH. Hensley testified that Mid-West’s full
time employees included Michael Hensley, Terry Jackson, Sr., Terry
Jackson Jr., and Chuck Thompson. Hensley Dep. at 46. The
parties do not dispute that Mid-West employed Cory Storm, Michael
Hensley, Terry Jackson, Sr., Terry Jackson, Jr., and Roy Matthews.
Mid-West remitted contributions to Plaintiffs on behalf of the
following Local 538 members: Cory Storm, Michael Hensley, Terry
Jackson, Jr., and Roy Matthews. As such, it appears to the Court
Page 8 of 25
that three out of four of Mid-West’s full-time employees previously
worked as full-time employees for AEH.
Mid-West asserts that it does not employ all of the employees
that were employed at AEH and employs at least 20 individuals who
were not employed by AEH. Plaintiffs dispute the materiality of
Mid-West employing 20 individuals not employed by AEH, asserting
that the proper inquiry is whether the successor corporation’s
regular employees worked for the predecessor corporation.
Plaintiffs also assert that the employees that both AEH and MidWest used accounted for 73% of the wages paid by Mid-West in
2013 and 65% of the wages paid by Mid-West in 2014 (not
including Mid-West’s officer manager Joni Kirkman’s wages in the
calculation). Pls. Resp. at 23-24 (d/e 48); Pls. Reply at 7, citing Ex.
1 (d/e 52).
Mid-West asserts that it generated gross revenue of $500,721
in 2013. Hensley Aff. ¶ 7 (d/e 44-5).
C.
Farmers and Mechanics Bank Calls Its Loans to AEH and
AEH Stops Operating
In September 2012, AEH sold the majority of its assets to help
fund operations. Hensley Supp. Aff. ¶ 4 (d/e 46-1). In January
Page 9 of 25
2013, Farmers and Mechanics Bank (F&M Bank) called its loans to
AEH and accelerated the amounts due. See Hensley Dep. at 21;
Hensley Aff. ¶ 13. Hensley had personally guaranteed the loans
with F&M Bank. See Workout Settlement Agreement, Mot. for
Summ., Ex. II.2 (d/e 45-12) (identifying Hensley and AEH as the
debtor).
On April 18, 2013 (shortly after the formation of Mid-West),
F&M Bank and AEH executed a Workout Settlement Agreement
that provided that F&M Bank would take possession of the real
property, equipment, and vehicles belonging to AEH with the
exception of the vehicles and equipment listed in the Schedule I to
the Agreement. Hensley Aff. ¶ 14; Workout Settlement Agreement
at ¶ 8 (d/e 44-9). With regard to the vehicles and equipment on the
Schedule I, AEH was allowed to use the listed vehicles and
equipment subject to F&M Bank’s right to repossess them.
Workout Settlement Agreement at ¶ 8. The vehicles and equipment
listed on Schedule I included: a 2000 3/4-ton Chevrolet pickup; a
1999 1-ton Chevrolet dump truck; 2008 1-ton Chevrolet pickup;
1992 Hullco trailer; 2000 Barlow trailer; a Volvo mini-excavator;
Page 10 of 25
and an Ingersol Rand Air compressor. See Schedule I to Workout
Settlement Agreement (d/e 44-9).
Hensley testified that AEH ceased operation when F&M called
the loan. Hensley Dep. at 20. However, he also testified that he
believed AEH would be able to continue after the Workout
Settlement Agreement was executed, just on a smaller scale.
Hensley Dep. at 23-25. Hensley tried, but failed, to obtain new
financing for AEH. Id. 25. However, AEH performed some snow
plowing after F&M called the loan. Id. at 20-21.
D.
Mid-West’s Payment of $80,000 to F&M Bank
Hensley testified that he assumed that F&M Bank would have
adequate funds from the sale of the building to pay off the loans.
Hensley Dep. at 24. However, after F&M Bank sold the building,
F&M Bank sought to enforce its liens on the equipment and
vehicles listed on the Schedule 1. Hensley at 28-19. F&M Bank
wanted $80,000 or the bank would take the equipment and vehicles
and sell them. Id. at 29.
Mid-West admits that Hensley, AEH, and F&M Bank reached
an accord to settle the matter between Hensley, AEH, and F&M
Bank for $80,000. By using Mid-West’s vehicles as collateral on a
Page 11 of 25
$65,000 loan and by including $15,000 of its own funds, Mid-West
provided the funds to settle the debt owed to F&M Bank by Hensley
and AEH. (Although Mid-West admits these facts, Mid-West argues
that the payment was to satisfy Hensley’s indebtedness as
guarantor).
E.
Evidence Pertaining to Vehicles and Equipment
Mid-West uses equipment and vehicles that were previously
owned and used by AEH. Mid-West also used equipment and
vehicles that were, at the time of use, owned by AEH. Specifically,
Mid-West used the following vehicles, all of which were once titled
in AEH’s name: a 1993 Chevrolet Kodiak truck (title transferred
from AEH to Mid-West on June 20, 2013); a 1978 TriStar Trailer
(title transferred from AEH to Mid-West on June 20, 2013); a 1999
Chevrolet K3500 1-ton dump truck (transferred to a third party on
April 6, 2015); a 2008 Chevrolet K3500 1-ton truck (currently titled
in AEH’s name); and a 2000 Chevrolet 3/4-ton pickup truck (title
transferred from AEH to Mid-West on November 10, 2014). MidWest also used the Volvo mini excavator and the Ingersol Rand air
compressor while the pieces of equipment were owned by AEH.
Mid-West asserts, but Plaintiffs dispute, that if Mid-West needed a
Page 12 of 25
backhoe to use for projects, it would rent a backhoe and other
miscellaneous equipment from Peoples Rental in Galesburg, Illinois.
The parties agree that AEH and Mid-West had different assets,
but Plaintiffs dispute the context in which the fact is proffered by
Mid-West. See Pls. Resp. at 5 (d/e 48). Plaintiffs assert that, after
AEH auctioned off its assets in 2012 but prior to F&M Bank calling
due its loans, AEH had, at the very least, 4 vehicles, 3 trailers, 1 air
compressor, and 1 mini-excavator. Mid-West used or had title to
those vehicles and equipment (July 2013 to November 2013, see Ex.
VII (d/e 45-43)). Moreover, it was not until October 2013—after a
summer’s worth of work—that Mid-West purchased or possessed its
first non-AEH vehicle.
F. Facts Pertaining to the Prairie Communications Job
Plaintiffs assert in their Motion for Summary Judgment that
AEH performed one last concrete construction project after F&M
called AEH’s loans due. Pls. Mot. for Sum. J. at 23 (d/e 45). AEH
bid on the sidewalk patching job for Prairie Communications in
Galesburg and was awarded the job. Hensley Dep. at 59. In March
2013, employees from AEH, namely Hensley and his son Michael,
Page 13 of 25
performed the work. Id. Mid-West generated an invoice for the job.
Pls. Resp., Ex. A (d/e 48-1).
Prairie Communications paid AEH for the work that was
performed. Hensley Dep. at 59; see also Pls. Mot. for Summ. J.,
Ex. II.12. Hensley testified that he gave 10% of the funds to AEH
for what he figured AEH’s profit would have been. Hensley Aff. at
59. The checks were deposited in Mid-West’s bank account,
although Mid-West argues that this was done to avoid having to
first transfer the funds to Mr. Hensley and then transfer the funds
to Mid-West to help fund operations. See Ex. II.12 (the checks) (d/e
45-22); Def. Resp. at 18 (d/e 46). Mid-West also asserts that
Hensley and his son performed the work in their individual capacity
and not as employees of AEH or Mid-West. Hensley Supp. Aff. ¶ 1
(d/e 56-1). Mid-West points out that the work was completed in
March 2013 (Id.), before Mid-West was incorporated. See Mid-West
Resp. at 18.
G.
Facts Pertaining to the Other Factors Relevant to
Successor Liability
The parties agree that Mid-West never held itself out as AEH.
Plaintiffs admit that AEH and Mid-West maintained separate bank
Page 14 of 25
accounts but assert that funds from AEH’s bank account were used
to maintain and repair vehicles that were used by Mid-West.
Hensley Dep. at 91; Pls. Mot. for Summ. J., Ex. II.24 (AEH checks
to Car Quest dated May 2013 and July 2013; AEH check to GRL
Tire dated August 2013; AEH check to Glenn’s Radiator Shop dated
August 2013).
H.
Facts Pertaining to Mid-West’s Notice of AEH’s Liability to
Plaintiffs
The parties do not dispute that, at the time AEH ceased
operations, and in no event later than March 31, 2013, Hensley was
aware that Central Laborers’ Pension Fund, and the other entities it
acts as a collection agent for, had made a demand on AEH for the
payment of certain liabilities, including delinquent fringe benefit
fund contributions. In fact, as of January 9, 2013, Hensley
acknowledged and had notice of AEH’s liability for contributions
and other amounts owed the Central Laborers’ Pension, Welfare
and Annuity Funds in excess of $22,000. On January 29, 2013,
Hensley, acting as obligor and authorized agent for AEH, signed a
Judgment Note that AEH would agree to pay the amounts owed the
Central Laborers’ Pension Fund.
Page 15 of 25
Plaintiffs contend that Mid-West, at the time of incorporation,
knew through Hensley that the Central Laborers’ Pension Fund and
the other entities it acts as a collection agent for had made a
demand of AEH for the payment of certain liabilities, including
delinquent fringe benefit contributions. Mid-West admits that
Hensley, as president of Mid-West, had knowledge of the alleged
liabilities owed by AEH but denies that Richison, as owner and sole
shareholder of Mid-West, had any knowledge of the alleged
liabilities owned by AEH. Mid-West Resp. at 3 (d/e 46).
III. ANALYSIS
Plaintiffs assert that Mid-West is obligated to pay the
contributions owed by AEH because Mid-West is the successor of
AEH. Mid-West asserts that the undisputed facts show that MidWest is not the successor of AEH.
The successor liability doctrine, which holds one corporation
liable for the liabilities of another corporation, applies in actions
seeking the recovery of delinquent multiemployer pension fund
contributions. Upholsterers’ Int’l Union Pension Fund v. Artistic
Furniture of Pontiac, 920 F.2d 1323, 1327 (1990). Successor
liability is an exception to the general rule that a corporation that
Page 16 of 25
purchases the assets of another does not assume liability for the
seller’s debts. Id. at 1325. Although the doctrine traditionally
applied only when assets were sold, the doctrine has been extended
to “encompass not only outright sales of a business but any
reorganization that results in a substantial continuation of the
business by the successor and either obliterates the previous
business or leaves it as an ‘empty shell.’” Cent. States, Se. & Sw.
Areas Pension Fund v. Wiseway Motor Freight, Inc., No. 99 C 4202,
2000 WL 1409825, at *6 (N.D. Ill. Sept. 26, 2000) (quoting (Chi.
Dist. Council of Carpenters Pension Fund v. J.F. McCarthy, Inc.,
No. 94 C 6881, 1996 WL 563459, at *6 (N.D. Ill. Sept. 30, 1996));
see also Sullivan v. Running Waters Irrigation, Inc., 739 F.3d 354,
357 (7th Cir. 2014) (noting that the formal purchase of assets is not
required to establish successor liability in the ERISA context).
In the ERISA context, successor liability may be imposed
where (1) the successor had notice of its predecessor’s liability and
(2) there exist sufficient indicia of continuity between the two
corporations. Artistic Furniture, 920 F. 2d at 1329. The relevant
factors to consider when determining whether there is a sufficient
continuity between the two corporations include, but are not limited
Page 17 of 25
to: (1) the identity of the officers, directors, and shareholders of the
two corporations; (2) whether the second corporation uses the same
location, workforce, and supervisors; (3) whether the second
corporation maintains the same jobs under substantially the same
working conditions; (4) whether the second corporation uses the
same machinery, equipment, and methods of production; and (5)
whether the second corporation fulfilled the work obligations or
commitments of the previous entity. See Reed v. Lawrence
Chevrolet, Inc., 14 F. App’x 679, 687 (7th Cir. 2001) (unpublished
disposition); Cent. Laborers’ Pension Fund v. Demolition Excavating
Group, Inc., No. 11-3327, 2014 WL 1308891, at *5 (C.D. Ill. April 1,
2014) (citing Artistic Furniture, 920 F.2d at 1329). Another factor
considered is whether the second corporation holds itself out as a
continuation of the first corporation. See, e.g., Cent. States, Se. &
Sw. Areas Pension Fund v. Hayes, 789 F. Supp. 1430, 1436 (N.D.
Ill. 1992) (finding, among other factors related to continuity, that
the new business held itself to the public as the old business). In
this case, the parties agree that Mid-West never held itself out as a
continuation of AEH.
Page 18 of 25
A.
The Undisputed Facts Show that Mid-West Had Notice of
AEH’s Liability to Plaintiffs
To succeed on the first prong of the successor liability test,
Plaintiffs must show that Mid-West had notice of AEH’s liability.
The undisputed facts demonstrate that Mid-West had such notice.
Plaintiffs can show notice by actual notice or evidence from
which knowledge may be implied. Sullivan, 739 F.3d at 357.
Notice can be implied from “[a] variety of circumstances, such as
common control or proximity.” Sullivan, 739 F.3d at 357.
In this case, the undisputed evidence shows that Hensley
knew of AEH’s liability. As president of Mid-West, Hensley’s
knowledge about AEH can be imputed to Mid-West as a matter of
law. See E.E.O.C. v. G-K-G, Inc., 39 F.3d 740, 748 (7th Cir. 1994)
(finding that “notice to the president of a company is notice to the
company as a matter of law”). Consequently, it is immaterial
whether Richison is a figurehead or whether Richison knew of the
liability. Moreover, in Mid-West’s response to AEH’s Request to
Admit, Mid-West admitted that, at the time of its inception, MidWest, through Hensley, knew Plaintiffs had made a demand on AEH
for the payment of certain liabilities, including delinquent fringe
Page 19 of 25
benefit contributions. See Def. Resp. to Request for Admission of
Facts (d/e 56), ¶ 7. Therefore, Mid-West had notice of AEH’s
liability.
B. Genuine Issues of Material Fact Preclude Finding Continuity
or a Lack of Continuity as a Matter of Law
To succeed on the second prong, continuity, Plaintiffs must
ultimately prove that there exist sufficient indicia of continuity
between the two corporations.
Mid-West asserts that the undisputed facts show that MidWest is not the successor of AEH because: (1) the corporations do
not have similar assets; (2) Mid-West did not purchase any assets
or equipment from AEH; (3) the corporations do not share a
common place of business; (4) the corporations do not employ the
same employees; (5) the scope of work performed by the two
corporations is different; (6) Mid-West generates substantially less
revenue than AEH; (7) Hensley’s role with Mid-West is vastly
different than his role with AEH; (8) Mid-West did not fulfill any
work obligations of AEH and did not pay any obligations of AEH;
and (9) Mid-West never held itself out as AEH.
Page 20 of 25
Plaintiffs assert the undisputed facts show that Mid-West is
the successor of AEH because: (1) the corporations have the same
president and Richison is a figurehead owner of Mid-West; (2) many
of AEH’s employees also worked for Mid-West; (3) AEH and MidWest performed the same type of work; (4) Mid-West used AEH’s
remaining equipment and vehicles; and (5) Mid-West fulfilled AEH’s
previous
commitments
and
obligations,
namely
the
Prairie
Communications job and the payoff to F&M Bank.
As previously noted, the parties have filed cross-motions for
summary judgment. When taking the facts in the light most
favorable to the non-moving party, the Court is unable to conclude
that the moving party is entitled to summary judgment. While the
undisputed facts demonstrate that some of the factors favor one
party or the other (the parties operate out of different locations,
Hensley was the main operator of both corporations, Mid-West did
not hold itself out as AEH), other factors do not. The continuity test
requires a case-specific, fact-intensive inquiry. Central States, Se.
& Sw. Areas Pension Fund v. TAS Inv. Co. LLC, No. 11-cv-2991,
2013 WL 1222042 (N.D. Ill. Mar. 25, 2013). And this Court must
consider the totality of the circumstances when determining
Page 21 of 25
whether a new corporation is the successor of the old corporation.
Fall River Dyeing & Finishing Corp. v. N.L.R.B., 482 U.S. 27, 43
(1987). On the facts presented here, summary judgment is not
warranted for either party.
The parties dispute, among other things, whether the two
corporations performed the same type of work and used same
equipment. For example, Mid-West asserts that AEH generated its
revenue from work much different than AEH: small concrete
projects versus heavy highway and bridge deck sealing. Although
Plaintiffs submit the affidavit of Cory Storm indicated that the two
entities perform the same type of work, this fact is disputed. See
Storm Aff. (d/e 48-5); Hensley Dep. at 14 (AEH’s primary source of
revenue was heavy highway—road patches, bridge deck sealer,
scales at the scale house); Hensley Dep. at 41 (Mid-West’s primary
source of revenue was miscellaneous construction—curb and
gutter, sidewalks, driveways, patios, garage floors).
The evidence presented about the equipment is also not clear.
AEH auctioned off a large number of assets in September 2012.
After F&M called the loans, AEH was left with three trucks, two
trailers, a mini excavator, and an air compressor. AEH claims MidPage 22 of 25
West used all of that equipment. Mid-West admits it used some of
AEH’s assets during 2013 but also claims it rented equipment from
Peoples Rental. Based on the evidence presented, it appears that
Mid-West ended up with the title to only one of the trucks on
the Schedule 1 and does not appear to own the other equipment
listed on Schedule 1. Two other pieces of equipment that were
owned by AEH were transferred to Mid-West (a 1993 Chevy Kodiak
truck and a 1978 TriStar Trailer). Mid-West used seven
vehicles/trailers as collateral for a September 2014 loan and only
one appears to have been previously owned by Mid-West (the 1993
Kodiak truck). Given this lack of clarity about the equipment, the
Court cannot determine on summary judgment the extent to which
this factor favors either party.
Some of the facts and inferences to be drawn from the facts
surrounding the Prairie Construction project also preclude
summary judgment to either party. The job was completed before
Mid-West was formed and Hensley asserts that he and his son
performed the work in their individual capacity, suggesting that
AEH was no longer operating at that time. However, Mid-West
Page 23 of 25
created the invoice for the job and the majority of the funds were
deposited in Mid-West’s bank account.
Given this mixed evidence, the Court finds summary judgment
for either party inappropriate. See, e.g., Demolition Excavating
Group, Inc., 2014 WL 1308891, at *8 (finding factual disputes as to
whether there is a sufficient indicia of continuity between the two
parties). The factors favoring the moving party, when taken in the
light most favorable to the non-moving party, are not so
overwhelming as to warrant summary judgment. See, e.g., TAS Inv.
Co. LLC, 2013 WL 1222042, at *9 (refusing to award summary
judgment to either party “on the fact intensive issue of successor
liability because there are several disputes as to the key facts that
the Court must consider as part of its totality of the circumstances
analysis”).
IV. CONCLUSION
For the reasons stated, Plaintiffs’ Motion for Summary
Judgment (d/e 45) and Defendant Mid-West’s Motion for Summary
Judgment (d/e 44) are DENIED. This case is set for a Final Pretrial
Conference on December 7, 2015 at 3:00 p.m. The parties are
reminded to comply with Local Rule 16.1, including Rule 16.1(E)(7)
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(requiring the parties submit an agreed set of findings of fact and
conclusions of law) and Rule 16.1(F) (prepare the proposed final
pretrial order). The proposed final pretrial order shall be filed by
noon on December 3, 2015. A date for the bench trial shall be
scheduled at the Final Pretrial Conference.
ENTERED: October 29, 2015
FOR THE COURT:
s/Sue E. Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE
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