Board of Trustees of Operating Engineers Local 37 Benefit Fund v. Doracon Contracting, Inc. et al
Filing
46
MEMORANDUM AND ORDER denying 43 Motion by Plaintiff for Summary Judgment; denying 44 Defendant's Cross Motion for Summary Judgment. Signed by Judge Marvin J. Garbis on 12/20/2011. (aos, Deputy Clerk)
In THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
BOARD OF TRUSTEES OF OPERATING *
ENGINEERS LOCAL 37 BENEFIT FUND
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Plaintiff
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vs.
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DORACON CONTRACTING, INC.,
et al.
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Defendants
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CIVIL ACTION NO. MJG-09-1857
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MEMORANDUM AND ORDER RE: SUMMARY JUDGMENT
The Court has before it Plaintiffs’ Motion for Summary
Judgment [Document 43] and Defendants’ Cross Motion for Summary
Judgment [Document 44] and the materials submitted relating
thereto.
The Court has held a hearing and had the benefit of
the arguments of counsel.
I.
BACKGROUND1
Plaintiffs, Joseph Shanahan, Charles Holub, James McNelis,
Pierce Flanigan IV, James Smith, Wade Hamel, and Randall Appel,
are Trustees of the Health & Welfare Fund, of the Severance &
Annuity Fund, of the Pension Fund, of the Vacation Fund, of the
Apprenticeship and Training Fund, and all of the International
1
The “facts” herein are as alleged by Plaintiffs and are not
necessarily agreed upon by Defendants.
Union of Operating Engineers Local 37 (“Union”) (collectively,
the “Trustees”).
Defendants Doracon Contracting Inc. (“Doracon”), and
Doracon Contracting Inc. of D.C.2 (“Doracon-DC”) were engaged in
construction work and employed members of the Union.
Defendant
Ronald Lipscomb (“Lipscomb”) was the sole director and
stockholder of Doracon and principal owner of Doracon-DC.
On
October 3, 2008, Doracon forfeited its corporate charter.
After
the forfeiture, Lipscomb continued to operate the Doracon
business using the corporate name.
Sometime prior to 2008, Doracon and the Union entered into
a Collective Bargaining Agreement (“CBA”).3
Under the CBA, the
Trustees sponsor employee benefits plans which provide pension,
health and welfare, vacation, severance, annuity, and training
benefits to members of the Union and their dependents.
Doracon was required to report and submit contributions on a
monthly basis on behalf of the Union members it employed.
2
There has been some inconsistency in the name used by
Plaintiffs to identify Doracon-DC. The Second Amended Complaint
accurately stated the corporate name as Doracon Contracting of
D.C., Inc., but the name was changed to Doracon Contracting Inc.
of D.C. in the Third Amended Complaint. The Court will, herein,
deem any reference to “Doracon Contracting Inc. of D.C.” refer
to Doracon Contracting of D.C., Inc.
3
Highway and Commercial Excavation Agreement by and between The
Maryland Heavy and Highway Contractors Association, Inc. and
Locals No. 37 and 37R of the International Union of Operating
Engineers AFL-CIO and Doracon Contracting, Inc. Pls.’ Mot. Ex
8.
2
Reports were submitted to Decision Science, Inc., a company
engaged by the Trustees to administer the funds.
The reports
detailed the hours worked by each Union member and the
corresponding contributions due to be paid on their behalf.
Although not a signatory to the CBA, Doracon–DC also submitted
reports and made payments pursuant to the terms of the CBA.
For the periods January through March 2008, and September
2008 through December 2009, Doracon and Dorocan-DC, while making
reports relating to overtime, did not make payments to the
trustees as provided in the CBA.
Therefore, Doracon has
“reported,” but not paid, a total of $379,661.36 and Doracon-DC
has “reported” and not paid a total of $62,234.15.
Plaintiffs are proceeding in this action4 (1) against
Lipscomb seeking to impose personal liability on him for the
$379,661.36 owed by Doracon5 and (2) against Doracon-DC for the
4
The original Complaint was filed on July 15, 2009 by the Board
of Trustees of Local 37 against Doracon and Lipscomb. The
Complaint was Amended in March 2010 to change the relevant
reporting periods and amounts due. It was again amended in
April 2010 to add Doracon Contracting of D.C., Inc. as a
defendant. The answer to the Second Amended Complaint included
an affirmative defense stating that the claims were barred
because the plaintiff lacked standing and was not the proper
party in interest. This led to termination of the Board of
Trustees of Local 37 and substitution by the individual trustees
as Plaintiffs in the Third Amended Complaint [Document 37]. At
the same time, the name of the newly added Defendant was changed
(by error) to “Doracon Contracting Inc. of D.C.”
5
The proceeding against Doracon was stayed pursuant to 11 U.S.C.
§ 362, after an involuntary Petition for relief under Chapter 7
3
$62,234.15 reported and not paid.
Lipscomb denies that he is
personally liable for the aforesaid obligation of Doracon, and
Doracon-DC denies that it has any liability to the Plaintiffs.
II.
SUMMARY JUDGMENT STANDARD
A motion for summary judgment shall be granted if the
pleadings and supporting documents “show that there is no
genuine issue as to any material fact and that the movant is
entitled to judgment as a matter of law.”
Fed. R. Civ. P.
56(c)(2).
The well-established principles pertinent to summary
judgment motions can be distilled to a simple statement:
The
Court may look at the evidence presented in regard to a motion
for summary judgment through the non-movant’s rose-colored
glasses, but must view it realistically.
After so doing, the
essential question is whether a reasonable fact finder could
return a verdict for the non-movant or whether the movant would,
at trial, be entitled to judgment as a matter of law.
See,
e.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986);
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Shealy v.
Winston, 929 F.2d 1009, 1012 (4th Cir. 1991).
Thus, in order to
defeat a motion for summary judgment, “the party opposing the
of the United States Bankruptcy Code was filed on September 21,
2010, Case No. 10-31707 (D. Md.).
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motion must present evidence of specific facts from which the
finder of fact could reasonably find for him or her.”
Mackey v.
Shalala, 43 F. Supp. 2d 559, 564 (D. Md. 1999) (emphasis added).
“Cross motions for summary judgment ‘do not automatically
empower the court to dispense with the determination whether
questions of material fact exist.’” Equal Rights Center v.
Archstone Smith Trust, 603 F. Supp. 2d 814, 820 (D. Md. 2009)
(quoting Lac Courte Oreilles Band of Lake Superior Chippewa
Indians v. Voigt, 700 F.2d 341, 349 (7th Cir. 1983)). Rather,
the court must examine each party’s motion separately and
determine whether summary judgment is appropriate as to each
under the Rule 56 standard.
Desmond v. PNGI Charles Town
Gaming, L.L.C., 630 F.3d 351, 354 (4th Cir. 2011).
The court
may grant summary judgment in favor of one party, deny both
motions, or grant in part and deny in part each of the parties’
motions. See Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir.
2003).
III. DISCUSSION
It suffices to state that, prior to the hearing, the Court
(and, presumably, defense counsel) was uncertain of the precise
nature of Plaintiffs’ contentions.
However, as clarified at the
hearing, Plaintiffs are proceeding on the following theories:
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1.
Lipscomb continued to operate Doracon after the
forfeiture of Doracon’s corporate charter and,
thereby, became personally liable for the obligations
incurred after that date, essentially because he was
operating as a sole proprietorship.
2.
Doracon-DC, although not a signatory to the CBA,
became a party to the CBA and/or agreed with the Union
to meet the obligations of a party to the CBA.
The parties did not fully, indeed hardly at all, address
these theories in their summary judgment papers.
Nevertheless,
it is readily apparent that neither side is entitled to summary
judgment, and the case should proceed to trial on these
theories.
However, the Court will afford the parties the
opportunity to submit pretrial memoranda and will, therefore,
address the theories without prejudice to reconsideration of the
applicable legal principles.
A.
LIPSCOMB LIABILITY
In Maryland law, a person who operates a business in the
name of a corporation after the corporate charter has been
forfeited,6 and incurs debts, is individually liable for the
debts.
In re Hare, 205 F. Supp. 881, 883 (D. Md. 1962);
see
also Moore v. Occupational Safety & Health Review Comm’n, 591
F.2d 991 (4th Cir. 1979)(recognizing that Maryland dissolution
statutes have been construed as imposing personal responsibility
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And prior to any revival.
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on corporate directors for liabilities incurred in the continued
operations of the dissolved corporation’s business after
forfeiture of its charter).
Indeed, knowingly transacting
business in the name of a corporation with a forfeited charter
is a crime in Maryland. Md. Code Ann., Corps. & Ass’ns, § 3514(a).
It would appear that, as expressed by the Court at the
hearing, the business operating under the name “Doracon
Contracting Inc.” is viewed as Lipscomb’s sole proprietorship.
The business is not a signatory to the CBA.
Hence Plaintiffs
would have to prove that the sole proprietorship acted so as to
become a party to the CBA, agreed to be bound by the terms of
the CBA, or otherwise became subject to the obligations to make
payments pursuant to reports filed for periods after the charter
forfeiture.
B.
See the following discussion regarding Doracon-DC.
DORACON-DC LIABILITY
Doracon-DC is not a signatory to the CBA.
Plaintiffs
contend that, nevertheless, Doracon-DC can be liable to make the
payments at issue.
As stated by Judge Nickerson in Washington Area Pension
Fund v. Mergentime Corp., 743 F. Supp. 422, 425 (D. Md. 1990):
Section 302 of the Labor Management
Relations Act prohibits employers from
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making payments to representatives of
employees unless the payments fall within
one of the statutory exceptions. One
exception, § 302(c)(5)(B), 29 U.S.C. §
186(c)(5)(B) (1978 Supp. 1990), allows an
employer to make contributions to a trust
fund established for the benefit of the
employees only if the obligation to
contribute is specified in a written
agreement. Employers are not required to be
“signatories” to the actual trust agreement.
The only requirement is that there be a
“written agreement” detailing the basis for
payments. Where there is a lack of signature
on the actual trust agreement or collective
bargaining agreement, courts interpreting §
302 follow two approaches. Some courts
require “strict compliance” with the written
agreement requirement demanding specific
incorporation of the relevant trust
agreement into the writing at issue. Other
courts do not require explicit
incorporation, but do require a “clear
reference” to the trust agreement. Absent a
“writing” incorporating a trust agreement or
collective bargaining agreement, the courts
are split over whether the “adoption by
conduct” theory is sufficient to satisfy §
302. The Fourth Circuit Court of Appeals has
not addressed these specific issues.
(citations and footnotes omitted).
Neither party has suggested that there has been a Fourth
Circuit decision, or a judicial consensus, regarding the open
questions noted by Judge Nickerson in his 1990 decision.
The
Court will seek to resolve the issues presented in light of the
facts found based on the evidence at trial.
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It suffices for the present to state that the Court cannot
foreclose the possibility of finding facts that would warrant
holding Doracon-DC liable herein.
IV.
CONCLUSION
For the foregoing reasons:
1.
Plaintiffs’ Motion for Summary Judgment [Document
43] is DENIED.
2.
Defendants’ Cross Motion for Summary Judgment
[Document 44] is DENIED.
3.
All references to “Doracon Contracting Inc. of
D.C.” in the Third Amended Complaint are deemed
to refer to Doracon Contracting of D.C., Inc.
4.
The case shall proceed to trial on the claims
addressed herein pursuant to further Order
SO ORDERED, on Tuesday, December 20, 2011.
/s/__________
Marvin J. Garbis
United States District Judge
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