Bell et al v. Architectural Woodwork, Inc. et al
Filing
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MEMORANDUM AND ORDER IT IS HEREBY ORDERED that Wood Ventures Group LLC's motion for summary judgment (Doc. 69 ) is GRANTED. An appropriate judgment will accompany this memorandum and order. Signed by Magistrate Judge Nannette A. Baker on 5/26/2021. (KXS)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
RENEE BELL, et al.,
Plaintiffs,
v.
ARCHITECTURAL WOODWORK, INC.,
et al.,
Defendants.
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Case No. 4:18-CV-496 NAB
MEMORANDUM AND ORDER
This matter is before the Court on Defendant Wood Ventures Group, LLC’s (“Wood
Ventures”) Motion for Summary Judgment. (Doc. 69.) The parties have consented to the
jurisdiction of the undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636(c).
(Doc. 13.) For the following reasons, the Court grants Wood Ventures’ Motion for Summary
Judgment.
I.
PROCEDURAL AND FACTUAL BACKGROUND
Plaintiffs previously moved for summary judgment against all three Defendants. (Doc. 49.)
The Court granted summary judgment in favor of Plaintiffs and against Defendants Architectural
Woodwork, Inc. (“AWC”) and Ahmann, LLC (“Ahmann”). The Court denied summary judgment
with respect to Plaintiffs’ claim against Wood Ventures. (Doc. 62.) Wood Ventures then filed the
present motion. (Doc. 68.) Wood Ventures and Plaintiffs both refer the Court to their prior briefing
on Plaintiffs’ Motion for Summary Judgment. (See Docs. 50, 51, 54-60.) No party has presented
the Court with any additional facts or law.
The Court incorporates by reference the facts presented in its prior order (Doc. 62) and
provides a brief summary here. The Carpenters Pension Trust Fund of St. Louis (“Pension Fund”)
is a multi-employer pension plan within the meaning of the ERISA, 29 U.S.C. §§
1002(2)(A) and (37)(A) which provides pension benefits to covered participants who meet the
qualifications of such benefits. AWC was party to collective bargaining agreements which
required it to make contributions to the Pension Fund. AWC was in the business of manufacturing
custom woodwork, primarily for commercial and institutional projects. At all relevant times, James
Ahmann Ryan had ownership interest in AWC.
AWC went out of business due to a loss of customers. AWC's last payroll was January 22,
2016, which reflected work performed by five employees who were members of the Carpenters
Union through January 19, 2016. When AWC ceased operations, Mr. Ryan owned 92% of AWC.
From February 2016 to April 2016, AWC's inventory, equipment and office furnishings were sold
at auction for a gross sales price of $313,189.00. As is further explained below, AWC transferred
the $313,189.00 in auction proceeds to Wood Ventures.
Wood Ventures Group, LLC is a limited liability company that was registered with the
Missouri Secretary of State on December 16, 2015. Its Articles of Organization state that it was
organized “for all valid business purposes.” Since its formation on this date, James Ryan has
owned 100% of its stock. According to Mr. Ryan, Wood Ventures was created for the purpose of
collecting a secured debt that AWC owed to Mr. Ryan. From approximately 2011 through 2014,
Mr. Ryan loaned AWC approximately $2,000,000, including unpaid interest. A Security
Agreement and UCC filing recorded AWC's debt owed to Mr. Ryan. Once AWC received the
$313,189.00 in liquidation proceeds from selling assets at auction, this sum was transferred to
Wood Ventures, and Wood Ventures transferred the sum to Mr. Ryan, who retained it for personal
use. According to Mr. Ryan, he structured his repayment through Wood Ventures because he did
not want to be identified to AWC's other creditors:
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It was assumed that unhappy creditors would be calling and talking to my attorney's
office and asking well, been told they're not going to get paid because everything
is going to go to the secured creditor. And the question is who's the secured creditor.
And it was felt that I would rather have them answer that as Wood Ventures Group,
LLC as opposed to Jim Ryan.
(Doc. 56, ¶ 4.)
As of January 19 or 22, 2016, AWC withdrew from the Pension Fund. The Pension Fund
calculated the withdrawal liability assessable to AWC to be $383,157. AWC has not paid any of
the assessed withdrawal liability.
On April 10, 2017, the Pension Fund notified Wood Ventures and Ahmann via letter of the
Pension Fund’s position that these two entities were members of a common control group with
AWC and thus were liable for AWC’s withdrawal liability.
II.
STANDARD OF REVIEW
Summary judgment is proper if there is no genuine issue of material fact and the moving
party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a). The Court views the
evidence and the inferences which may be reasonably drawn from the evidence in the light most
favorable to the nonmoving party. See Adkison v. G.D. Searle & Co., 971 F.2d 132, 134 (8th Cir.
1992). The moving party has the burden of showing the absence of a genuine issue of material fact
and that it is entitled to judgment as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
III.
DISCUSSION
Under ERISA, covered employees are protected by insuring their benefits against
insolvency or termination of their pension funds. The MMPA amended ERISA to impose
mandatory liability on all withdrawing employers of multiemployer plans for their proportionate
shares of unfunded vested benefits. 29 U.S.C. § 1381. The withdrawing employer is not the only
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entity that can be held liable. For purposes of assessing and collecting withdrawal liability, all
“trades or businesses” under “common control” with the withdrawing employer are treated as a
single entity. 29 U.S.C. § 1301(b)(1). Each trade or business found to be under common control is
jointly and severally liable for any withdrawal liability of any other. See Central States, Southeast
and Southwest Areas Pension Fund v. SCOFBP, LLC, 668 F.3d 873, 876 (7th Cir. 2011).
The Court previously found that Wood Ventures was under common control with AWC.
(Doc. 62.) The issue that remains is whether Wood Ventures is a “trade or business” within the
meaning of § 1301(b)(1).
In the January 19, 2021 order granting in part and denying in part Plaintiffs’ motion for
summary judgment, the Court set out the applicable law regarding how courts determine whether
an entity is a “trade or business.” (Doc. 62 at 10-13.) The Court incorporates by reference that
discussion here. Briefly, it is important to note that the Eighth Circuit has provided little guidance
as to what constitutes a “trade or business;” however, courts typically engage in a factual inquiry
to make the determination. See Vaughn v. Section, 975 F.2d 498, 502 (8th Cir. 1992). Additionally,
several courts utilize the Groetzinger test to analyze the “trade or business” inquiry. See, e.g., Cent.
States Se. Sw. Areas Pension Fund v. Messina Prod., LLC, 706 F.3d 874, 878 (7th Cir. 2013)
(citing Commissioner of Internal Revenue v. Groetzinger, 480 U.S. 23, 107 S.Ct. 980, 94 L.Ed.2d
25 (1987)). The “Groetzinger test” requires that an activity must be performed (1) for the primary
purpose of income or profit, and (2) with continuity and regularity, to be considered “trade or
business.” Id. In Groetzinger, the Court distinguished between “sporadic activity, a hobby, or an
amusement diversion,” on the one hand, and a trade or business, on the other. Groetzinger, 480
U.S. at 35.
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In the present motion, the burden is on Wood Ventures to show there are no genuine issues
of material fact such that no reasonable fact finder could find that Wood Ventures was a trade or
business. For the reasons stated in the January 19, 2021 order and stated herein, the Court finds
Wood Ventures has met this burden. First, there are not sufficient facts to show Wood Ventures’
primary purpose was for income or profit. In making the primary-purpose-of-income-or-profit
determination, courts consider the facts and circumstances that distinguish between operating for
income or profit and operating for “personal” reasons. See Groetzinger, 771 F.2d 269, 274 (7th
Cir. 1985), aff’d, 480 U.S. 23. The undisputed facts show that Wood Ventures’ only activity was
to act as a secured creditor to collect debt owed by AWC to Mr. Ryan. It is undisputed that Mr.
Ryan had a Security Agreement and UCC filing securing loans Mr. Ryan made to AWC of
approximately two million dollars. Wood Ventures was assigned the debt owed by AWC, and
collected AWC’s liquidation proceeds of $313,189 and transferred the sum to Mr. Ryan. Mr. Ryan
testified that the reason for repayment of the secured debt through Wood Ventures was so that he
would not be identified to AWC’s other creditors. Such a reason is personal rather than for the
generation of income or profit, and Plaintiffs have not presented facts to suggest an alternative
purpose that would satisfy the income-or-profit prong.
Second, Plaintiffs have not presented any additional facts to suggest that Wood Ventures
had additional operations or activities. Wood Ventures’ one-time transfer of funds is insufficient
to demonstrate continuous or regular activity to meet the second prong of the Groetzinger test.
See, e.g., Cent. States, Se. & Sw. Areas Pension Fund v. Fulkerson, 238 F.3d 891, 895 (7th Cir.
2001) (mere possession of a property, without more, is the hallmark of an investment and not a
regular or continuous trade or business activity).
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Lastly, Wood Ventures correctly points out that the one-time transfer of funds took place
after AWC’s January 2016 withdrawal from the Pension Fund. In determining control group
liability, courts analyze the relationship in the time period before the employer withdraws from
the pension fund. See, e.g., UFCW Loc. One Pension Fund v. Enivel Properties, LLC, 791 F.3d
369, 373 (2d Cir. 2015) (“The relevant time period for evaluating whether an entity is a trade or
business is the period before the employer withdraws”); SCOFBP, LLC, 668 F.3d at 880 (analyzing
the relationship at the time of withdrawal); Teamsters Pension Tr. Fund of Philadelphia v.
Brigadier Leasing Assocs., 880 F. Supp. 388, 396 (E.D. Pa. 1995) (“Withdrawal liability is
imposed only on those trades and businesses that are under common control with the withdrawing
employer on the date of withdrawal.”). Although Wood Ventures was registered as an LLC by Mr.
Ryan on December 16, 2015, Plaintiffs cannot point to any other activity undertaken by Wood
Ventures until after the liquidation of AWC’s inventory, which took place from February through
April of 2016. Accordingly, there are no disputed facts to suggest Wood Ventures was a trade or
business such that it should be considered an employer under the MPPAA prior to AWC’s
withdrawal. The Court grants Wood Ventures summary judgment on this issue.
Accordingly,
IT IS HEREBY ORDERED that Wood Ventures Group LLC’s motion for summary
judgment (Doc. 69) is GRANTED.
An appropriate judgment will accompany this memorandum and order.
NANNETTE A. BAKER
UNITED STATES MAGISTRATE JUDGE
Dated this 26th day of May, 2021.
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