Trustees of the Cement Masons Pension Fund et al v. Evans Construction/Consulting LLC et al

Filing 25

MEMORANDUM OPINION signed by the Honorable Charles P. Kocoras on 8/12/2009.Mailed notice(sct, )

UNITED STATES DISTRICT COURT N O R T H E R N DISTRICT OF ILLINOIS E A ST E R N DIVISION T R U ST E E S OF THE CEMENT MASONS PENSION FU N D , LOCAL 502, TRUSTEES OF THE CEMENT M A SO N S INSTITUTE OF CHICAGO, ILLINOIS, T R U ST E E S O F THE CEMENT MASONS SAVINGS FU N D , LOCAL 502, and TRUSTEES OF THE C E M E N T MASONS APPRENTICE EDUCATION A N D TRAINING FUND, LOCAL 502, and T R U ST E E S OF THE CEMENT MASONS PENSION FU N D , LOCAL 803, TRUSTEES OF THE CEMENT M A SO N S INSTITUTE OF CHICAGO, ILLINOIS; T R U ST E E S OF THE CEMENT MASONS SAVINGS FU N D , LOCAL 803; and TRUSTEES OF THE C E M E N T MASONS APPRENTICE EDUCATION A N D TRAINING FUND, LOCAL 803, ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

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P l a i n t i ffs , v. E V A N S CONSTRUCTION/CONSULTING LLC, E V A N S CONSTRUCTION SERVICES (1555 South W a bash Project) LLC, EVANS CONSTRUCTION SE R V IC E S (10 East Delaware Project), LLC, EVANS C O N ST R U C T IO N SERVICE (110 West Superior Project), LLC and EVANS CONSTRUCTION SE R V IC E S (303 West Ohio Project), LLC, D e fe n d a n t s . M E M O R A N D U M OPINION C H A R L E S P. KOCORAS, District Judge:

T h is matter comes before the court on a motion to dismiss the Plaintiff Trustees of the Cement Masons Pension Fund, Local 502 and Local 803 ("Trustees")'s complaint pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction. For the follow ing reasons, the motion is denied. BACKGROUND In a separate case filed on September 30, 2008, the Trustees sued Millennium C oncrete Construction, LLC ("Millennium"), which resulted in a $333,646.01 default ju d g m e nt before Judge Ronald Guzman in the Northern District of Illinois against M ille nn iu m for unpaid benefits and liquidated damages for violating the Employee R e tire me nt Income Security Act of 1974, 29 U.S.C. § 1132 ("ERISA") and the National L abor Relations Act, 29 U.S.C. § 185(a). On May 11, 2009, the Trustees filed the instant action against a group of defendants referred to as the Evans Defendants.1 The May 11 complaint repeats many of the allegations made against Millennium in the case before Judge Guzman. H o w e v er, Millennium is not named as a defendant in this case. Instead, the Trustees allege that the Evans Defendants are the alter ego of Millennium.

The group consists of Evans Construction/Consulting, LLC, Evans Construction S e r v ic e s (1555 South Wabash Project), LLC, Evans Construction Services (10 East D e la w are Project), LLC, Evans Construction Services (110 West Superior Project), LLC, E v a n s Construction Services (303 West Ohio Project), LLC. -2-

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In the present action, the Trustees seek to hold the Evans Defendants liable for the $333,646.01 judgment arising out of Millennium's failure to make payments to the m ultie mp lo ye r ERISA pension funds. The Evans Defendants now challenge that subject matter jurisdiction. They argue in favor of dismissal on the basis that the complaint imposes a judgment on them, yet fails to raise an ERISA violation or any other independent federal question. L E G A L STANDARD A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) requests that the court dismiss an action for lacking subject matter jurisdiction. Jurisdiction is the "power to decide" and must be conferred upon a federal court. In re Chicago, 794 F.2d 1182, 1188 (7th Cir. 1986). The plaintiff bears the burden of establishing that the

jurisdictional requirements have been met. See Kontos v. U.S. Dep't of Labor, 826 F.2d 573, 576 (7th Cir. 1987). When reviewing a motion to dismiss under Rule 12(b)(1), this court "must accept as true all well-pleaded factual allegations, and draw reasonable in fe re nc es in favor of the plaintiff." Ezekial v. Michel, 66 F.3d 894, 897 (7th Cir. 1999). D IS C U S S IO N T h e Evans Defendants move to dismiss the Trustees' complaint based on their perception that it fails to establish an independent federal question. Asserting that the T rustees merely seek to hold them liable for the judgment entered against Millennium,

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the thrust of the Evans Defendants' argument relies on a Supreme Court case precluding E R IS A jurisdiction and ancillary jurisdiction over suits to enforce previously obtained E R ISA judgments. Peacock v. Thomas, 516 U.S. 349, 353, 116 S.Ct. 862, 866 (1996). A fter Peacock, however, the Seventh Circuit created a situation permitting a plaintiff in the second suit to allege that an alter ego of the original defendant is directly liable for the ERISA violation, giving a federal court jurisdiction over the second suit. B d . of Trs., Sheet Metal Workers Nat'l Pension Fund v. Elite Erectors, Inc., 212 F.3d 1031, 1038 (7th Cir. 2000). More specifically, the exception arose out of the distinction b etw e e n piercing the corporate veil and the alter ego theory. The Peacock court rejected the "piercing the corporate veil" argument because it requires the use of state law and asks a court to hold A vicariously liable for B's debt. Id. Liability under E R ISA is federal, so by asserting that A is B's alter ego, a plaintiff suggests that A and B are the same entity making liability direct and not vicarious. Id. To properly plead federal jurisdiction in a second suit, a plaintiff must allege that the defendant is the alter ego of the original defendant. The factors a court must c on sid er in deciding whether a plaintiff has properly pled an alter ego claim under E R ISA are the following: (1) amount of respect given to a separate identity of c orp ora tio n by its shareholders; (2) fraudulent intent of incorporators; and (3) degree of injustice visited on litigants by respecting the corporate entity. Cent. States,

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S ou th ea st & Southwest Areas Pension Fund v. Cent. Transp., Inc., 85 F.3d 1282, 1287 (7th Cir. 1996). In their complaint, the Trustees have alleged that Millennium is a su b c o n tra c tor to the Evans Defendants and it maintains offices rent free in the same loca tion . Contending that the Evans Defendants have no respect for Millennium's shareh olde rs, the Trustees allege that Millennium has only one officer and shareholder, fails to hold meetings for either its board of directors or its shareholders, is undercapitalized, and does not keep corporate minutes. The Trustees also claim that the E vans Defendants have direct control over Millennium's financial operations, establishing an alleged fraudulent intent. As it is presently pled, the Trustees have ap pe ared to satisfy the pleading requirements illustrating that the Evans Defendants are the alter ego of Millennium. In their reply brief, the Evans Defendants argue that the Trustees have the burden of establishing the jurisdictional requirements for purposes of a Rule 12(b)(1) motion. H ow ever, they have not alleged any material contradicting the factual allegations contained in the Trustees' complaint. Since the complaint is formally sufficient in pleading that the Evans Defendants are the alter ego of Millennium, and the defendants have not created a factual dispute based on the pleadings, we accept the Trustees' allegations as true for purposes of this motion and deny it accordingly.

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C O N C L U S IO N B ased on the aforementioned, the motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction is denied.

Charles P. Kocoras U nited States District Judge D a te d : August 12, 2009

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