Central States, Southeast and Southwest Areas Pension Fund et al v. RINSP, LLC

Filing 55

MOTION by Plaintiffs Arthur H. Bunte, Jr, Central States, Southeast and Southwest Areas Pension Fund for judgment (Attachments: # 1 Exhibit A - Recording Cover Page, # 2 Exhibit B - Connors v. Vick, # 3 Exhibit C - Lee Declaration, # 4 Exhibit D - Proposed Judgment Order)(Lee, Charles)

EXHIBIT B

Page 1
Not Reported in F.Supp., 1992 WL 200853 (S.D.W.Va.), 15 Employee Benefits Cas. 1342
(Cite as: 1992 WL 200853 (S.D.W.Va.))

United States District Court, S.D. West Virginia.
Joseph P. CONNORS, Sr., Donald E. Pierce, Jr.
William Miller, Thomas H. Saggau and Paul Dean,
Trustees of the United Mine Workers of America
1974 Pension Trust, Plaintiffs,
v.
George B. VICK and Gerda Vick, Defendants.
Civ. A. No. 5:91–0289.
March 13, 1992.
MEMORANDUM OPINION
HALLANAN, District Judge.
*1 This matter is before the Court via
Plaintiffs' Motion for Summary Judgment. The
Court has received Defendants' memorandum in response and Plaintiffs' reply brief. Having carefully
considered the papers presented, the Court is prepared to issue its ruling herein.
The Trustees of the United Mine Workers of
America 1974 Pension Trust (“Trust”) bring this
action against the Defendants to have this Court declare certain conveyances of real estate null and
void. The Trustees contend that the conveyances
described below were made to evade or avoid collection of withdrawal liability pursuant to Section
4212(c) of the Employee Retirement Income and
Security Act of 1974 (“ERISA”), 29 U.S.C. §
1392(c). The Trustees also contend that the conveyances violate federal common law governing fraudulent transfers. Jurisdiction is proper under 28
U.S.C. § 1331. As there are no material facts in dispute, this matter is ripe for summary judgment.
FN1
Fed.R.Civ.P. 56(c).
FN2
Statement of the Case
The Plaintiffs administer the Trust out of their
offices in the District of Columbia. As trustees,
they are fiduciaries with respect to the Trust within
the meaning of 29 U.S.C. § 1002(21) and are collectively the plan sponsor of the Trust within the

meaning of 29 U.S.C. § 1002(16)(B)(iii). The
Plaintiffs are authorized to bring this action under
29 U.S.C. § 1132(a)(3) as the Trust is an employee
benefit plan within the meaning of 29 U.S.C. §
1002(37).
The Defendants, husband and wife, are residents of West Virginia. Defendant George B. Vick
formerly engaged in the business of transporting
coal to and from coal mines under the name of HC
Trucking. Mr. Vick was a signatory party to the National Bituminous Coal Wage Agreements of 1974
and 1978 (“Wage Agreements”). Pursuant to the
Wage Agreements, George Vick d/b/a HC Trucking
was a participating employer in the Trust and made
contributions to the Trust on behalf of HC Trucking
employees. Mr. Vick ceased covered operations under the Trust and stopped making contributions to
the Trust in or about March 1981. Through ceasing
covered operations, Mr. Vick effected a complete
withdrawal from the Trust within the meaning of 29
U.S.C. § 1383(a)(2) and thereby incurred withdrawal liability to the Trust in an amount determined by
the Trust. 29 U.S.C. § 1391(d)(1).
By letter dated April 14, 1982, the Trust advised Mr. Vick of his withdrawal liability to the
Trust in the amount of $8,029.80. The same letter
further advised Vick of an option to discharge his
liability by making monthly payments of $104.31.
This Defendant admits to receiving such notice.
Thereafter, Mr. Vick failed to make any payments
to the Trust and did not seek further review of the
determination of withdrawal liability or arbitration
under 29 U.S.C. §§ 1399(b)(2)(A) and 1401(a)(1).
Later on December 9, 1982, the Plaintiffs demanded payment of all past due withdrawal liability
payments plus interest ($548.07) no later than February 11, 1983. The December 9 letter also advised
the Defendant that failure to pay by February 11,
1983 would result in the $8,029.80 of withdrawal
liability becoming immediately due and owing
without further demand. Despite the warning, Mr.
Vick failed to make any payments and was there-

© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.

Page 2
Not Reported in F.Supp., 1992 WL 200853 (S.D.W.Va.), 15 Employee Benefits Cas. 1342
(Cite as: 1992 WL 200853 (S.D.W.Va.))

fore in default on his obligation under 29 U.S.C. §
1399(c)(5).
*2 In May 1985 the Trust filed a withdrawal liability action against Mr. Vick in the Federal District Court for the District of Columbia, styled
Joseph P. Connors, et al. v. George B. Vick, trading
as HC Trucking, Civil Action No. 85–1549. Mr.
Vick accepted service of the summons and complaint in said action on or about May 23, 1985 and
answered the complaint on or about May 31, 1985.
Later on August 7, 1985, the Trust moved for summary judgment in the withdrawal liability action.
By Order entered October 10, 1985, the district
court granted the motion and entered judgment in
favor of the Trust for $8,029.80, the withdrawal liability amount, plus accrued interest. The judgment
has been registered in this district (Miscellaneous
5:86–00004) but has not been satisfied in full or in
part.
Prior to the entry of judgment in the withdrawal liability action and shortly after accepting service
of the pertinent summons and complaint, Mr. Vick
conveyed his interest in two parcels of real property
to his wife, Defendant Gerda Vick. In a deed executed on June 26, 1985, Mr. Vick conveyed to his
wife his one-sixth interest in property described as
“the surface of that portion of Tracts Nos. 2 and 3
(marked “James Vick”) on the southern side of a
hard surfaced road as shown on a map entitled
“Map Showing Partition of the Land * * * J.E.
Larew, C.E., Beckley, W.Va.” attached to a deed
from G.W. Boyer, et al, to James Vick dated
April 1, 1929, and of record in the Office of the
Clerk of the County Commission of Raleigh
County, West Virginia, in Deed Book 103, at
page 94, and which said tracts or parcels of land
are shown and designated upon the Raleigh
County Assessor's Tax Map for Town Tax District Numbered 4, as Parcel No. 76.”
See Exhibit A—Memorandum in Support of
Plaintiffs' Motion for Summary Judgment. The
deed was recorded on July 1, 1985 in the Office of

the Clerk of the County Commission of Raleigh
County, West Virginia in Deed Book 698 at pages
413–414.
The second conveyance was also by deed on
June 26, 1985 in which Mr. Vick conveyed to his
wife his interest in property described as
“BEGINNING at a steel pin in the eastern boundary line of the tract heretofore owned by Byrace
R. Skeens and Rodney A. Skeens, as described in
Deed Book 615, at Page 28, which said steel pin
is N. 3° 13' E. 350 feet from a line in the northern
right-of-way line of the Old Crow Road–WV
Route 19–15; thence S. 85° 37' W. 250.06 feet to
a steel pin on the western side of the gravel roadway leading to the Old Crow Road; thence N. 2°>
56' E. 165 feet to a set hub; thence N. 85° 37' E.
250.88 feet to a tack in lead plug in rock; thence
S. 3° 13' W. 165.11 feet to the point and place of
BEGINNING, and containing 40,991.30 square
feet; and which said tract or parcel of land is
shown and designated upon the Raleigh County
Assessor's Tax Map for Shady Springs Tax District numbered 14, as Parcel No. 58.”
See Exhibit C—Memorandum in Support of
Plaintiffs' Motion for Summary Judgment. This
FN3
property is the residence of the Defendants.
The deed effecting this second conveyance was recorded on July 1, 1985 in the Office of the Clerk of
the County Commission of Raleigh County, West
Virginia in Deed Book 698 at pages 372–373.
Discussion
*3 The Trustees assert that Mr. Vick conveyed
his ownership interests in the two parcels in an effort to escape the Trust's collection of withdrawal
liability in violation of 29 U.S.C. § 1392(c). This
section provides:
If a principal purpose of any transaction is to
evade or avoid liability under this part, this part
shall be applied (and liability shall be determined
and collected) without regard to such transaction.

© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.

Page 3
Not Reported in F.Supp., 1992 WL 200853 (S.D.W.Va.), 15 Employee Benefits Cas. 1342
(Cite as: 1992 WL 200853 (S.D.W.Va.))

This ERISA provision came into existence in
1980 as part of the Multiemployer Pension Plan
Amendments Act (“MPPAA”), 29 U.S.C. §§ 1381–
1461. The MPPAA was intended, in part, to discourage employers from withdrawing from multiemployer pension plans and leaving plans with inadequately funded liabilities. Local 478 Trucking
and Allied Industries Pension Fund v. Jayne, 778
F.Supp. 1289, 1302 (D.N.J.1991) (citations omitted). The legislative history of 29 U.S.C. § 1392(c)
reveals that federal courts are to look to the substance of transactions rather than the form of such
transactions in determining, assessing and collectFN4
ing withdrawal liability.
Moreover, legislative
intent calls for federal courts not to permit
“employers to evade or avoid withdrawal liability
through changes in identity, form or control, or
through transactions which are less than bona fide
and arm's length.” Cuyamaca Meats, Inc. v. San
Diego and Imperial Counties Butchers' and Food
Employers' Pension Trust Fund, 827 F.2d 491, 499
(9th Cir.1987), cert. den. 485 U.S. 1008 (1988)
(quoting legislative history).
The Defendants deny that the conveyances
were made to escape or avoid withdrawal liability
and that the transfers are legitimate. Mr. Vick goes
as far to claim that he was not aware of his withdrawal liability in June 1985 when he conveyed his
interests to his wife. However, the evidence is to
the contrary. Mr. Vick admits that the Trust assessed him with withdrawal liability in the amount
of $8,029.80 by letter dated April 14, 1982. In addition, Plaintiffs' December 9, 1982 letter demanded
payment from Mr. Vick for all past due withdrawal
liability payments plus interest by February 11,
1983. Furthermore, Mr. Vick concedes that he accepted service of the summons and complaint for
the withdrawal liability action initiated by the Trust
in May 1985—over a year before the conveyances.
Clearly, Mr. Vick was well aware of his withdrawal
liability.
Mrs. Vick also asserts the defense that she was
unaware of the withdrawal liability of her husband,

trading as HC Trucking, in June 1985 when she received her husband's property interests. Yet her
knowledge or lack of knowledge regarding withdrawal liability is irrelevant. Knowledge is not required as a precondition for imposition of withdrawal liability. See Central States, Southeast and
Southwest Areas Pension Fund v. Minneapolis Van
& Warehouse Co., 764 F.Supp. 1289, 1296
(N.D.Ill.1991) (shareholder's lack of knowledge
could not be used as a defense to pension fund's
claim for withdrawal liability payments owed to
pension fund under MPPAA against dissolved corporation whose assets were distributed to shareholder). To allow Mrs. Vick to claim ignorance of
the law so as to permit Mr. Vick to convey his
property interests would, as the Plaintiffs assert,
thwart the policy of the MPPAA. Mr. Vick's withdrawal liability arose as a matter of law when he
ceased covered operations under the Trust in or
about March 1981, thereby effecting a complete
withdrawal. 29 U.S.C. § 1383(a)(2). The liability
persisted during June 1985 when he conveyed his
property interests to his wife. The conveyances
alone, we believe, ripened Plaintiffs' § 1392(c)
claim. Accord Minneapolis Van, 764 F.Supp. at
1296 (“Distribution alone, and not an affirmative
intent to defraud, establishes this type of “fraud on
the creditor”) (emphasis in original). In this connection, the Court finds that the Trustees brought this
action within the applicable statute of limitations.
29 U.S.C. § 1451(f)(1).
*4 The Defendants submit that the conveyances
are supported by adequate consideration in the form
of love and affection for one another and Gerda
Vick's assistance to her mother-in-law, Mae Vick.
Deposition testimony of the Defendants reveals that
Mae Vick did not reside with the Defendants and
that Mrs. Vick was not the primary caretaker but
one of several relatives who cared for Mae Vick.
Moreover, there does not exist a written agreement
between the Defendants or a provision in the subject deeds whereby Mr. Vick agreed to convey his
interests in return for the love, affection and assistance of his wife. This argument necessarily fails.

© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.

Page 4
Not Reported in F.Supp., 1992 WL 200853 (S.D.W.Va.), 15 Employee Benefits Cas. 1342
(Cite as: 1992 WL 200853 (S.D.W.Va.))

In evaluating Plaintiffs' claim that Mr. Vick
sought to avoid his withdrawal liability through the
above conveyances, we consider the totality of the
circumstances. Retirement Benefit Plan of Graphic
Arts International Union Local 20–B v. Standard
Bindery Company, 654 F.Supp. 770, 772
(E.D.Mich.1986). Mr. Vick conveyed his interests
to Mrs. Vick within four to five weeks after accepting service of the summons and complaint in the
withdrawal liability action. The Court believes this
fact alone renders the conveyances inherently suspect. The timing of the conveyances strongly suggest that the purpose was to evade or avoid withdrawal liability. In addition, the conveyances did
not lead to a change in the Defendants' actual circumstances. Furthermore, the conveyances are
without economic substance as the Defendants continue to live in their home as they did before the
June 1985 conveyance. Overall, we conclude that
the principal purpose of the conveyances was to
avoid the Trust's collection of withdrawal liability
and, therefore, the conveyances are void transactions pursuant to 29 U.S.C. § 1392(c) and the Court
imposes a constructive trust on the conveyed property for the benefit of the Plaintiffs. Having determined liability under the MPPAA, the Court need not
consider Plaintiffs' alternative ground for liability
under federal common law governing fraudulent
transfers.
Accordingly, for reasons heretofore stated,
Plaintiff's Motion for Summary Judgment will be
granted. An appropriate judgment order shall issue.
The Clerk is directed to send copies of this
Memorandum Opinion to all counsel of record.

pertinent provisions of ERISA by referring
to the section numbers provided in Title 29
of the United States Code rather than the
section numbers contained in the legislative text.
FN3. The Defendants previously took title
to the property as joint tenants with rights
of survivorship by deed recorded on May
30, 1980 in the Office of the Clerk of the
County Commission of Raleigh County,
West Virginia, found in Deed Book 628 at
pages
595–596.
See
Exhibit
B—Memorandum in Support of Plaintiffs'
Motion for Summary Judgment.
FN4. [T]he bill provides that transactions
undertaken to evade or avoid withdrawal
liability may not be used as a method of
escaping withdrawal liability that would
otherwise be imposed. It is intended that
the plan sponsor, the arbitrator, and the
courts follow the substance rather than the
form of such transactions in determining,
assessing, and collecting withdrawal liability. This rule is to apply when evasion of
liability is a principal purpose of a transaction, whether or not the transaction has
other purposes as well. 126 Cong.Rec.
23038 (1980).
S.D.W.Va.,1992.
Connors v. Vick
Not Reported in F.Supp., 1992 WL 200853
(S.D.W.Va.), 15 Employee Benefits Cas. 1342
END OF DOCUMENT

IT IS SO ORDERED.
FN1. The Court notes that the Defendants'
memorandum in opposition contains a factual summary that mirrors the factual summary contained in Plaintiffs' summary
judgment brief.
FN2. Hereafter, the Court will discuss the

© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.