Michigan Regional Council of Carpenters Employee Benefits Fund et al v. Infinity Homescapes, L.L.C. et al

Filing 31

OPINION AND ORDER granting in part and denying in part 23 plaintiffs' Motion for Summary Judgment. Signed by District Judge George Caram Steeh. (MBea)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

TRUSTEES OF MICHIGAN
REGIONAL COUNCIL OF
CARPENTERS’ EMPLOYEE
BENEFITS FUND, et al.,

CASE NO. 17-CV-10816
HON. GEORGE CARAM STEEH

Plaintiffs,
v.
INFINITY HOMESCAPES,
LLC, et al.,
Defendants.
________________________/
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT (Doc. 23)

I. Overview
Plaintiff trustees of employer trust funds have brought this Employee
Retirement Income Security Act (“ERISA”) suit for unpaid fringe benefits
owing against two companies, and their sole owner Jamey Woodson and
his wife, Josie Lewis. Plaintiffs also include the Michigan Regional Council
of Carpenters United Brotherhood of Carpenters and Joiners of America
(the “Union”) and six employees of Defendant Infinity Homescapes, LLC
(“Homescapes”). Plaintiffs also brought claims under the Fair Labor

-1 

Standards Act (“FLSA”) and related state law claims. Now before the
court is Plaintiffs’ motion for summary judgment.
This matter had been scheduled for oral argument on March 29,
2018. On March 28, 2018, Defendants Woodson and Lewis notified the
court that they had filed a petition for bankruptcy and that an automatic
stay pursuant to Section 362(a) of the Bankruptcy Code applied. Based
on the automatic stay, this court does not address the claims against the
individual Defendants Woodson and Lewis. On the date scheduled for
oral argument, the court met with counsel for both sides in chambers to
discuss the matter. During the in chambers conference, defense counsel
admitted to liability only on behalf of Defendant Homescapes and the
parties agreed that they would submit a proposed order to that effect and
agreed that it was unnecessary to put their agreement on the record.
Thereafter, defense counsel e-mailed Plaintiffs’ counsel that she agreed
that Homescapes was liable for some fringe and wage benefits, but was
not waiving her argument that the matter must be arbitrated or that judicial
estoppel barred the action, and noted her intent to appeal. Based on this
procedural background, the court decides the pending motion based on
the written submissions.

-2 

For the reasons set forth below, the court GRANTS Plaintiffs’
motion as to liability only on ERISA and FLSA claims as to Defendant
Homescapes, and DENIES summary judgment on the claim for the filing of
fraudulent W-2s.
II. Background
Plaintiffs are a collection of Michigan Carpenter Employee Benefit
Funds (collectively “Funds”), six former employees of Homescapes, and
the Union. Defendants are Homescapes, a company that performs
residential and commercial carpentry construction work; Infinity Millworks
(“Millworks”), which performs residential carpentry work; Woodson, the
sole owner of Homescapes and Millworks; and his wife, Lewis. Lewis is
an attorney who performs legal work for both companies. In addition, she
handles administrative and secretarial work. In addition to being a named
defendant, Lewis also represents all Defendants in this lawsuit.
Homescapes came into existence in 2016. Plaintiffs allege that
Homescapes grossed over $500,000 in 2016, based on invoices of slightly
less than $500,000 and $175,000 in change orders from one of
Homescapes’ largest jobs. Although Lewis testified at her deposition that
the $175,000 was owing, Homescapes now claims the $175,000 sum was
an estimate not of sales, but of expenses for two other projects.

-3 

On September 16, 2016, Homescapes executed a collectivebargaining agreement (the “CBA”) with the Union. Following execution of
the CBA, Homescapes employed, among others, the six named Plaintiffs
in this lawsuit: (1) John Duval, (2) Brian Patterson, (3) Robert Swixx, (4)
Carl Touchette, (5) Jeff Roettger, and (6) Damien Hirst. Also, in
September, 2016, Homescapes suffered financial difficulties when general
contractor, Thorndale Construction Services (“Thorndale”), failed to pay
amounts owing.
Plaintiffs contend that Defendants’ answers to interrogatories and
deposition testimony establish that Defendants failed to pay wages, issued
payroll checks on accounts with insufficient funds, unlawfully issued 1099s
to workers, and issued incorrect W-2s. Indeed, in their answers to
interrogatories, Defendants admit that Plaintiffs Roettger, Hirst, Swixx,
Touchette, Patterson, and Duval worked for Homescapes during the time
periods in late October, 2016 stated, and admitted that they were told not
to cash their checks because of insufficient funds. (Doc. 23, Ex. G at PgID
801-804, Ex. C at 42, PgID 607). At his deposition, Woodson admitted
that his workers were not paid wages or fringe benefits for that time period,
but that he paid suppliers. (Doc. 23, Ex. B at PgID 592). An audit
conducted by the Funds auditors confirmed that Homescapes failed to
-4 

make the required fringe benefit contributions. (Doc. 23, Ex. H).
According to the audit, Homescapes owes $111,187.07. (Doc. 23, Ex. H
at PgID 819). Homescapes also admits that some employees were issued
1099s, which are tax forms used to report income to independent
contractors, because they were “minimizing” their tax liability. (Doc. 23,
Ex. C at 37-38, PgID 606). Homescapes also admitted that it issued W-2s
that were inaccurate because they included unpaid wages, and did not
contain wages reported on the 1099s. (Doc. 23, Ex. C at 96, PgID 615).
Plaintiffs’ Complaint alleges eleven counts. Count I seeks delinquent
contributions under ERISA. Count II alleges failure to permit updated
audit. Count II is now moot as an updated audit took place on December
1, 2017. Count III alleges breach of fiduciary duty under ERISA against
Homescapes, Woodson, and Lewis. Count IV alleges violations of the
Michigan Building Contract Fund Act (“MBCFA”), Mich. Comp. Laws §
570.151 et seq. Count V alleges federal minimum wage violations
pursuant to the Fair Labor Standards Act (“FLSA”). Count VI alleges state
minimum wage violations. Count VII alleges federal overtime violations
pursuant to the FLSA. Count VIII alleges state overtime violations. Count
IX alleges failure to pay wages in violation of Michigan law. Count X
alleges failure to pay amount of dishonored checks pursuant to Mich.
-5 

Comp. Laws § 600.2952. Finally, Count XI alleges filing fraudulent W-2s
in violation of 26 U.S.C. § 7434.
III. Standard of Law
Federal Rule of Civil Procedure 56(c) empowers the court to render
summary judgment "forthwith if the pleadings, depositions, answers to
interrogatories and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of law." See Redding v.
St. Eward, 241 F.3d 530, 532 (6th Cir. 2001). The Supreme Court has
affirmed the court's use of summary judgment as an integral part of the fair
and efficient administration of justice. The procedure is not a disfavored
procedural shortcut. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986);
see also Cox v. Kentucky Dep’t of Transp., 53 F.3d 146, 149 (6th Cir.
1995).
The standard for determining whether summary judgment is
appropriate is "'whether the evidence presents a sufficient disagreement to
require submission to a jury or whether it is so one-sided that one party
must prevail as a matter of law.'" Amway Distributors Benefits Ass’n v.
Northfield Ins. Co., 323 F.3d 386, 390 (6th Cir. 2003) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986)). The evidence and all

-6 

reasonable inferences must be construed in the light most favorable to the
non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986); Redding, 241 F.3d at 532 (6th Cir. 2001).
"[T]he mere existence of some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion for summary
judgment; the requirement is that there be no genuine issue of material
fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)
(emphasis in original); see also National Satellite Sports, Inc. v. Eliadis,
Inc., 253 F.3d 900, 907 (6th Cir. 2001).
If the movant establishes by use of the material specified in Rule
56(c) that there is no genuine issue of material fact and that it is entitled to
judgment as a matter of law, the opposing party must come forward with
"specific facts showing that there is a genuine issue for trial." First Nat'l
Bank v. Cities Serv. Co., 391 U.S. 253, 270 (1968); see also McLean v.
988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir. 2000). Mere allegations
or denials in the non-movant's pleadings will not meet this burden, nor will
a mere scintilla of evidence supporting the non-moving party. Anderson,
477 U.S. at 248, 252. Rather, there must be evidence on which a jury
could reasonably find for the non-movant. McLean, 224 F.3d at 800 (citing
Anderson, 477 U.S. at 252).
-7 

IV. Analysis
A.

Arbitration
Defendants argue that this case must be dismissed because

Plaintiffs have not exhausted the grievance procedure and arbitration set
forth in Article XV of the CBA. Upon review of the arbitration clause in the
CBA and applicable law, Defendants’ argument lacks merit. First, the
court considers Plaintiffs’ claim for unpaid fringe benefit contributions
under Section 502 of ERISA. The Supreme Court’s decision in Schneider
Moving & Storage Co. v. Robbins, 466 U.S. 364 (1984) is dispositive on
this issue. In Schneider, as here, trustees of multi-employer trust funds
brought an ERISA action against two companies for delinquent
contributions as required by the trust agreement, as incorporated into the
terms of the applicable collective bargaining agreement. The Court held
that the presumption of arbitrability did not apply to disputes between
trustees and employers. Id. at 372-73. The Court then examined the trust
agreement and collective bargaining agreement and found that neither
evidenced an intent on the part of the parties to require arbitration of
disputes between trustees and the employers. Id.
This case presents an even stronger argument that the parties
evidenced no intent to require arbitration between Plaintiff Trust Funds and
Defendant Employers over delinquent contributions as the Trust Fund
-8 

specifically provides, “No matter respecting the foregoing, or any
difference arising thereunder, or any matter involved in this Trust
Agreement, shall be subject to the grievance procedure established in any
Collective Bargaining Agreement.” (Doc. 1-2 at PgID 127). Based on this
express language in the Trust Agreement, Plaintiff Trust Funds are not
subject to the grievance and arbitration procedures set forth in the CBA
and may proceed with their ERISA claim for delinquent fringe benefit funds
in this court.
The court turns now to the remaining claims to determine if those
claims are subject to the grievance procedure set forth in the CBA and
must be submitted to arbitration. The court must first determine as a
threshold matter whether an agreement creates a duty for the parties to
arbitrate a particular grievance or claim. AT & T Techs., Inc. v. Commc’ns
Workers of Am., 475 U.S. 643, 649 (1986); see also Granite Rock Co. v.
Int'l Bhd. of Teamsters, 561 U.S. 287, 297 (2010) (court “may order
arbitration of a particular dispute only where [it] is satisfied that the parties
agreed to arbitrate that dispute.”) (emphasis in original)).
This inquiry requires the Court to evaluate, first, whether a valid
agreement to arbitrate exists between the parties and, second, whether
the specific dispute at issue falls within the substantive scope of that
-9 

agreement. Watson Wyatt & Co. v. SBC Holdings, Inc., 513 F.3d 646, 649
(6th Cir. 2008).
Here, Title XV of the CBA sets forth a grievance procedure. Section
15.1 provides:
Grievances. Should differences of any kind arise between
the employer and the Union as to the interpretation,
application or claimed breach of any of the terms of this
Agreement, all such differences shall be submitted to the
grievance procedure herein provided.
(Doc. 23, Ex. E at PgID 765). The CBA then established a two-step
grievance procedure. As the last step in that process, Section 15.6
requires that any claim that cannot be settled or adjusted, is to be
submitted to arbitration. Having set forth the parties’ arbitration
agreement, the court now considers the remaining claims to determine if
they are covered by the agreement and finds that they are not. Those
claims are: (1) unpaid wages under state law and the FLSA, (2) failure to
pay dishonored checks under state law, and (3) filing of fraudulent W-2s.
The grievance procedure set forth in the parties’ CBA does not address
any such claims.
A brief review of Supreme Court precedent in this area is instructive.
In Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728 (1981), the
Court held that worker’s FLSA claims were not barred by their prior

- 10  

submission of their grievance in arbitration procedures because Congress
intended to give individual workers their right to bring minimum wage
claims in court, and FLSA rights are independent of the collective
bargaining process. Id. at 745. Although Barrentine stated the proposition
broadly that employees could not bargain away their right to bring statutory
rights established by Congress in court and instead be required to arbitrate
such claims, the Court has since retreated on that sweeping proposition
and has since held that employees can be bound by arbitration
agreements, even when they involve statutory rights, when their waiver of
such rights is clearly established in their collective-bargaining agreement.
See 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 274 (2009) (“collectivebargaining agreement that clearly and unmistakably requires union
members to arbitrate ADEA claims is enforceable as a matter of federal
law”). Although recent precedent has taken a more favorable and
expansive view of arbitration, even this precedent requires that the waiver
of statutory rights to judicial proceedings must be “clear and unmistakable”
before an arbitration requirement will be enforced. There is no “clear and
unmistakable” waiver of Plaintiffs’ FLSA rights here, nor of Plaintiffs’ state
law claim for failure to pay dishonored check, or filing of fraudulent W-2s.

- 11  

Defendants’ reliance on Ramirez v. Bridgestone Retail Operations,
LLC, No. 12-cv-14480, 2013 WL 1507221, (E.D. Mich. Apr. 12, 2013) is
misplaced. In that case, the arbitration clause was much more expansive
than the clause at issue here. Specifically, the clause in Ramirez
provided, “[a]ny other matters arising from or concerning the employment
relationship . . . including . . . without limitation: [c]ompensation, bonus,
and wage and hour claims under federal, state, or local statutes . . .
including the Fair Labor Standards Act.” Id. at *3. There, the court not
only referenced wage and hour claims as falling within the gambit of the
arbitration clause, it specifically referenced state and federal statutes and
expressly mentioned the FLSA by name. No comparable breadth of the
arbitration requirement exists here. By contrast, the arbitration clause
here applies to “the interpretation, application or claimed breach of any of
the terms of this Agreement.” None of Plaintiffs’ claims here involve a
breach of the CBA; rather, they allege violations of federal and state
statutes. Accordingly, the court rejects Defendants’ argument that
Plaintiffs’ claims are subject to arbitration.
Just as federal law requires the court to conclude that Plaintiffs’
ERISA and FLSA claims are not subject to the CBA’s grievance
procedures and arbitration requirement, the court reaches the same
- 12  

conclusion as to Plaintiffs’ state law claims. Under Michigan law, the
question of whether a controversy is arbitrable represents a question of
law for the courts. Madison Dist. Pub. Sch. v. Myers, 247 Mich. App. 583,
594–95 (2001). “To ascertain the arbitrability of an issue, the court must
consider whether there is an arbitration provision in the parties' contract,
whether the disputed issue is arguably within the arbitration clause, and
whether the dispute is expressly exempt from arbitration by the terms of
the contract.” Id. at 595. Here, Plaintiffs seek to recover under Michigan
statutes, not for breaches of the CBA. The grievance and arbitration
provisions of the CBA do not address these statutory rights, and thus,
these matters are ripe for judicial review and are not subject to arbitration.
B.

Judicial Estoppel
Defendants argue that proceedings in an unrelated lawsuit in Kent

County Circuit Court requires that this matter be arbitrated under the
theory of “judicial estoppel.” That lawsuit is pending between Thorndale
against Homescapes and the Union. In that case, the circuit court granted
the Union’s motion for summary disposition of Homescape’s crosscomplaint on the grounds that the matter was covered by the CBA’s
mandatory grievance and arbitration requirements. Defendants have not
demonstrated that that matter has any similarity to the case pending here
- 13  

which involves federal ERISA and FLSA claims, and related state law
claims deriving from statutory law. Accordingly, the court summarily
rejects Defendants’ claim that “judicial estoppel” requires that this matter
be submitted to arbitration.
C.

Fringe Benefit Contributions under ERISA
Plaintiffs seek to recover unpaid fringe benefit contributions from

Homescapes which are owing under the Funds’ Trust agreements and the
CBA pursuant to ERISA, 29 U.S.C. §§ 1132(a)(3), 1132(g)(2) & 1145.1
Plaintiffs seek delinquent contributions, collection costs, interest, attorney
fees, and liquidated damages, which are all recoverable pursuant to §
1132(g)(2). In their Complaint, Plaintiffs sought to compel an audit under
ERISA. That audit occurred in December, 2017. Based on the audit,
Plaintiffs contend they are entitled to $111,187.07 in delinquent
contributions, including liquidated damages and interest. In addition to the
audit, Plaintiffs rely upon Defendants’ answers to interrogatories and
Woodson’s deposition testimony where he admitted that not all fringe
benefits were paid.

1

Defendants argue that Millworks was not a party to the CBA and thus, cannot be
liable for unpaid fringe benefit contributions or unpaid wages. In their motion, Plaintiffs
have not articulated a basis for seeking summary judgment for unpaid fringe benefits
against Millworks pursuant to ERISA. 
- 14  

In response, Homescapes argues that the fringe benefit
compensation calculations as set forth in Plaintiffs’ audit are incorrect
because they included four employees who were allegedly terminated
before the CBA went into effect on September 16, 2016, and two other
workers whom it claims never joined the Union. (Doc. 29, Ex. F). In
support of these assertions, Homescapes relies upon Woodson’s affidavit
and handwritten notes purported to be business records. Homescapes
also alleges that it hired four employees prior to the effective date of the
CBA. This argument appears baseless as the CBA would cover them
once it went into effect. (Doc 1-1, CBA at Article II, 2.2 at PgID 43).
The court must also reject Homescapes’ argument that certain
employees were not Union members, and thus, not entitled to fringe
benefit contributions. The CBA requires the employer to make
contributions to the various Trust Funds for all “covered Employees.”
(Doc. 1-1, Art. X of CBA, PgID 53). The CBA defines “Coverage” as “It is
specifically agreed and understood that this Agreement exclusively
governs the wages, terms, and conditions of employment of all Carpenters
performing work of any description coming under the jurisdiction of the
[Union], employed by the Employer who is engaged in commercial,
industrial, institutional and heavy construction work.” Id. Art. II, 2.2 of
- 15  

CBA, at PgID 43. The CBA further provides that “the terms ‘carpenter’,
‘worker’ or ‘Employee’ shall be used interchangeably.” Id.

The Sixth

Circuit has held that similar language in a collective bargaining agreement
requires contributions to be made on behalf of all employees without
distinguishing between union and non-union members. See Teamsters'
Local 348 v. Kohn Beverage, 749 F.2d 315, 318 (6th Cir. 1984). Further,
“[t]he absence of language distinguishing union and non-union employees
indicates that the agreement covers all employees.” Id. at 318. Moreover,
construing the language in the CBA as requiring Homescapes to make
fringe benefit contributions for all employees performing work covered by
the CBA and not just those employees who are union members is
consistent with the National Labor Relations Act (“NLRA”) which makes it
illegal for an employer to discriminate against union and non-union
employees in the award of fringe benefits. See Section 8(a)(3) of the
NLRA, 29 U.S.C. § 158(a)(3); Trustees of the Operating Engineers' Local
324 Pension v. Glencorp, Inc., 178 F. Supp. 3d 600, 606 (E.D. Mich.
2016).
“Under Sixth Circuit precedent, where an ERISA fund plaintiff has
provided proof of an employer's failure to pay fringe benefit contributions
on behalf of its employees for work covered by a collective bargaining
- 16  

agreement, the burden shifts to the employer to produce evidence as to
what work is not covered.” Plumbers Local 98 Defined Ben. Pension Fund
v. M & P Master Plumbers of Michigan, Inc., 608 F. Supp. 2d 873, 881
(E.D. Mich. 2009) (citing Michigan Laborers' Health Care Fund v. Grimaldi
Concrete, Inc., 30 F.3d 692, 696–97 (6th Cir.1994)). As noted in M & P
Master Plumbers, “ERISA Section 209, 29 U.S.C. § 1059, mandates that
an employer maintain records with respect to each of its employees,
sufficient to determine what benefits are owing to them.” Under the
“burden-shifting” approach set out in Grimaldi, where an employer clearly
violates ERISA by failing to maintain adequate records as required by 29
U.S.C. § 1059(a)(1), the court found that “the penalty must fall upon the
person who had legal responsibility to maintain those records.” Id. at 695.
Thus, “[a]n employer cannot escape liability for his failure to pay his
employees the wages and fringe benefits due to them under the law by
hiding behind his failure to keep records as statutorily required.” Id. at 697.
Although Homescapes’ proofs are sparse, it has come forward with
some evidence that certain employees were terminated prior to the
execution of the CBA. Also, Homescapes has submitted paychecks which
allegedly demonstrate that, Cooke, Swix, Hirst and Livernois were paid for
much of the claimed insufficiency. (Doc. 29, Ex. L and M). Based on this
- 17  

evidence, there is some question of fact as to the total amount of fringe
benefit contributions owing. Accordingly, the court shall enter summary
judgment as to liability only and hold that Plaintiffs are entitled to
delinquent fringe benefit contributions, interest, liquidated damages, and
attorney fees, but leave open the question of damages.
D.

FLSA Claims
Plaintiffs also move for summary judgment for minimum wage and

overtime violations under the FLSA and similar state statutes, Mich. Comp.
Laws § 408.471 and 408.411. However, Plaintiffs have not discussed the
Michigan statutes in their brief, but limit their discussion solely to the FLSA
claims. The court does so likewise. There is no dispute that Homescapes
did not pay all of the wages owing to its employees. Homescapes seeks
to avoid liability for FLSA violations by arguing their company lacked
enough earnings to be covered by the statute.
In order to come within the ambit of the FLSA, an employer must
have “annual gross volume of sales made or business done [in an amount]
not less than $500,000.” 29 U.S.C. § 203(s)(1)(A)(ii). Homescapes
admits that it had gross sales in 2016 in the amount of $448,929.01. (Doc.
25 at PgID 849). Plaintiffs also rely on Lewis’ deposition testimony that
2016 gross sales also included another $175,000 owed by Thorndale, one
- 18  

of Homescapes’ largest jobs. In its response brief, Homescapes asserts
that Lewis was actually referring to a Chick-Fil-A project which amounted
to only $61,800. The law is well settled in the Sixth Circuit that “a party
cannot create a disputed issue of material fact by filing an affidavit that
contradicts the party's earlier deposition testimony.” Aerel, S.R.L. v. PCC
Airfoils, L.L.C., 448 F.3d 899, 906 (6th Cir. 2006). Here, Homescapes has
not even submitted an affidavit, but attempts to avoid the effect of Lewis’
deposition testimony by attempting to mischaracterize it in its response
brief. At this stage of the litigation, Homescapes is bound by Lewis’
deposition testimony. As such, its gross sales for 2016 exceed $500,000,
and Homescapes is a covered enterprise under the FLSA.
Homescapes also argues that it cannot be liable under the FLSA
because it did not act willfully. Willfulness is not required under the FLSA,
except to elongate the statute of limitations period to three years. 29
U.S.C. § 255(a); Elwell v. Univ. Hosps. Home Care Servs., 276 F.3d 832,
842 (6th Cir. 2002).
E.

MBCFA Claim
Plaintiffs also seek summary judgment on their claim under the

Michigan Building Contract Fund Act (“MBCFA”). Although the MBCFA is
a penal statute, the Michigan Supreme Court has recognized that a civil
- 19  

cause of action may be brought for its violation. B.F. Farnell Co. v.
Monahan, 377 Mich. 552, 555 (1966). To establish a claim pursuant to the
MBCFA, a plaintiff must show: “(1) that the defendant is a contractor or
subcontractor engaged in the building construction industry, (2) that the
defendant was paid for labor or materials provided on a construction
project, (3) that the defendant retained or used those funds, or any part of
those funds, (4) that the funds were retained for any purpose other than to
first pay laborers, subcontractors, and materialmen, and (5) that the
laborers, subcontractors and materialmen were engaged by the defendant
to perform labor or furnish material for the specific construction project.”
Livonia Bldg. Materials Co. v. Harrison Const. Co., 276 Mich. App. 514,
519 (2007). Where the plaintiff can demonstrate that the defendant
received payment on a construction project, but did not pay laborers,
subcontractors, materialmen, or others entitled to payment, there is a
“reasonable inference of appropriation.” BC Tile & Marble Co., Inc. v. Multi
Bldg. Co., Inc., 288 Mich. App. 576, 588 (2010). Defendants can rebut this
inference by presenting evidence that they did not divert funds in
contravention of the MBCFA. Livonia Building, 276 Mich. App. at 521.
Here, Plaintiffs are entitled to summary judgment on their MBCFA
claims against Homescapes as Plaintiffs have established their prima facie
- 20  

case, which Homescapes has not rebutted. Plaintiffs have shown that
Homescapes is a contractor and that Homescapes was paid on two
Michigan construction projects (Doc. 23, Ex. I and J), the Timber Trail
project in the amount of $34,001, and the Woodridge project in the amount
of $52,955. Homescapes admits that it did not pay the fringe benefits
owing for the employees on these projects, but argues that Plaintiffs have
not met their prima facie case because they have not shown that Woodson
kept the funds for his personal use or to keep his business afloat, and
have not shown that non-allowable parties were paid. However,
Homescapes has mischaracterized the burden of proof. Plaintiffs are
entitled to an inference of misappropriation based on proof that
Homescapes was paid on specific projects but they were not paid monies
due and owing to them. The burden then shifts to Homescapes to rebut
the prima facie case. Homescapes has made no attempt to indicate what
amounts were properly paid and should be credited towards the amount
Plaintiffs claim is due and owing. No form of accounting has been provided
to the Court. See Trustees of Mich. Reg'l Council of Carpenters Employee
Benefits Fund v. Accura Concrete Walls, Inc., 408 F. Supp. 2d 370, 373
(E.D. Mich. 2005). Under these circumstances, Plaintiffs are entitled to
summary judgment on their MBCFA claim against Homescapes.
- 21  

F.

Dishonored Checks
Plaintiffs also seek to recover under Mich. Comp. Laws § 600.2952

which provides civil remedies in favor of the victim of a dishonored check.
Section 600.2952 “relates to any person or entity given a check that is
dishonored by the drawee (i.e., the bank).” Michigan Deferred
Presentment Servs. Ass'n v. Comm'r of Office of Fin. & Ins. Regulation,
287 Mich. App. 326, 334 (2010). There is no dispute that Homescapes
provided its employees with paychecks that were dishonored for lack of
sufficient funds. Homescapes argues that Plaintiff employees are to
blame for attempting to cash paychecks which they should have known
would not clear. Homescapes’ argument lacks merit and summary
judgment shall enter for Plaintiffs on their claim for civil remedies for
dishonored checks.
G.

False W-2s
Lastly, the court considers whether Homescapes is liable for

presenting false W-2s. 26 U.S.C. § 7434 provides:
(a) In general.--If any person willfully files a fraudulent
information return with respect to payments purported to
be made to any other person, such other person may bring
a civil action for damages against the person so filing such
return.

- 22  

26 U.S.C. § 7434. At her deposition, Lewis admitted that W-2s were
inaccurate because they included wages that some employees were not
paid. (Doc. 23, Ex. C at 96, PgID 615). However, Lewis also testified that
corrected W-2s were issued, id., and Homescapes has submitted
amended W-2s for four employees. (Doc. 29, Ex. N). Under these
circumstances, a question of fact exists as to whether the inaccurate W-2s
were willfully filed and Plaintiffs are not entitled to summary judgment on
their claim for the filing of fraudulent W-2s.
H.

Mitigation of Damages
Defendants argue that Plaintiffs failed to mitigate their damages by

presenting paychecks they had been told would not clear, or somehow
could have lessened their damages in connection with unpaid wages and
fringe benefits. Defendants rely on authority governing contract and tort
claims under Michigan law. This authority does not apply to claims for
dishonored checks or wage and hour claims under state and federal law.
I.

Millworks
Because Plaintiffs have not specifically addressed Millworks’ liability

as to any of their claims, the court will likewise refrain from doing so.

- 23  

V. Conclusion
For the reasons set forth above, IT IS ORDERED that Plaintiffs’
motion for summary judgment (Doc. 23) is GRANTED in part as follows:
Plaintiffs’ motion for summary judgment is GRANTED as to liability
only on Count I for delinquent contributions under ERISA against
Defendant Homescapes, and is awarded interest, liquidated damages, and
attorneys’ fees.
Plaintiffs’ motion for summary judgment is GRANTED as to liability
for federal minimum wage violations under the FLSA (Count V) and federal
overtime violations under the FLSA (Count VII) as to Defendant
Homescapes.
Plaintiffs’ motion for summary judgment is GRANTED as to liability
for violations of the MBCFA (Count IV) against Defendant Homescapes.
Plaintiffs’ motion for summary judgment for failure to pay amount of
dishonored checks (Count X) is GRANTED as to liability against
Defendant Homescapes.
Plaintiffs’ motion for summary judgment for the filing of fraudulent W2s (Count XI) is DENIED.

- 24  

Based on the entry of the automatic stay, the court has not
addressed any of the claims against Woodson and Lewis individually.
IT IS SO ORDERED.
Dated: April 9, 2018
s/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE

CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
April 9, 2018, by electronic and/or ordinary mail.
s/Marcia Beauchemin
Deputy Clerk

- 25