Trustees of the Ohio Bricklayers Health & Welfare Fund et al v. VIP Restoration, Inc. et al

Filing 16

Memorandum of Opinion and Order: Plaintiffs' Motion for Summary Judgment (Doc. 15 ) is GRANTED. The Court also grants Plaintiffs leave to file a properly supported motion for attorneys' fees and costs within fourteen (14) days of the date of this Order. Judge Patricia A. Gaughan on 2/16/18. (LC,S)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

Trustees of Ohio Bricklayers
Health and Welfare Fund, et al.,
Plaintiffs,
vs.
VIP Restoration, Inc., et al.,

Defendants.

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CASE NO. 1:17 CV 437
JUDGE PATRICIA A. GAUGHAN

MEMORANDUM OF OPINION
AND ORDER

INTRODUCTION
This matter is before the Court upon Plaintiffs’ Motion for Summary Judgment against
Defendant Rick Semersky. (Doc. 15). The motion is unopposed. This is an ERISA case. For
the reasons that follow, the motion is GRANTED.
FACTS
Plaintiffs are Trustees of the following funds: the Ohio Bricklayers Health and Welfare
Fund, the Bricklayers and Trowel Trades International Pension Fund, the International Masonry
Institute, the Bricklayers and Allied Craftworkers Local No. 55 Pension Fund, and the
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Bricklayers and Allied Craftworkers Local No. 7 Pension Fund (together, the “Funds”).
Plaintiffs bring this lawsuit against Defendants VIP Restoration, Inc. (“VIP”) and its president,
Rick Semersky, Jr., alleging claims for breach of collective bargaining agreements, breach of
fiduciary duty, and violation of the Employee Retirement Income Security Act of 1974
(“ERISA”).
The Funds are multi-employer plans, which are maintained pursuant to collective
bargaining agreements (“CBAs”) between VIP and Local Unions Nos. 5, 7, 8, 16 and 55 (“Local
Unions”). (Docs. 1 and 5 ¶¶ 3, 10). It is undisputed that the Funds are trust funds that were
established for the purpose of providing health care, pension, and related benefits for participants
and their dependents. (Docs. 1 and 5 ¶ 3; Doc. 15-6 ¶ 2).
The CBAs require VIP to pay contributions to the Funds for work done in the geographic
jurisdiction of the Local Unions. (Docs. 1 and 5 ¶¶ 12, 13). Pursuant to the CBAs, VIP also
agrees to submit timely and accurate monthly reports to the Funds with respect to all employees
performing covered work and to make contributions to the Funds. Id. at ¶ 14. The CBAs require
VIP to submit to audits by the Funds to determine that the contributions had been made in
accordance with the parties’ agreements. Id. at ¶ 11. The terms of the CBAs provide that when
VIP fails to make timely contributions to the Funds, it is required to pay a penalty, including but
not limited to interest and liquidated damages. (Doc. 1-3, PageID# 116; Doc. 1-4, PageID# 137;
Doc. 1-5, PageID# 189-190; Doc. 1-7, Page ID#256-57; Doc. 1-8, PageID# 284-85).
Semersky is the president, owner, and principal officer of VIP. (Docs. 1 and 5 ¶¶ 6, 27).
He admits to being a fiduciary under ERISA. Id. at ¶ 6. He is the only person with authority to
sign checks at VIP, and he had the final say over which VIP bills were paid. (Doc. 15-11,

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PageID# 767; Doc. 15-12, PAGEID#851).
Semersky also owned other companies, and admitted in his deposition that he used
monies from the VIP bank account for the benefit of himself and his other companies. (Doc. 1517, PAGEID#794-800). For example, VIP paid for the liquor permit for one of Semersky’s
restaurants. Id. at 799-800. VIP paid for a consultant and other individuals who did work for
Semersky’s other companies. Id. at 794, 800. VIP also paid for Semersky’s Shoreby Club
membership. Id. at 795. VIP repeatedly transferred money to Semersky’s other restaurants. Id.
at 797-98. Meanwhile, VIP did not stay current with the contributions that it owed to the Funds.
(See Doc. 15-6 ¶ 5).
The Funds retained an auditor to review the books and records of VIP and determine
whether VIP had paid contributions on all work covered by the CBAs during the period January
1, 2012 through September 30, 2016. (Doc. 15-1 ¶ 1). Larry Brown, CPA, conducted the audit.
Id. at ¶¶ 1-2. Auditor Brown determined that VIP failed to pay contributions in a timely manner,
and, therefore, accrued interest and liquidated damages. Id. ¶ 5. Further, VIP frequently paid
contributions late. Funds Administrator Kimberly Wood and Executive Director David F. Stupar
calculated the additional interest and liquidated damages associated with VIP’s late payments.
(Doc. 15-6; Doc. 15-15).
VIP went into receivership in September 2017. (Doc. 11-1). Documents produced by
VIP demonstrate that the funds loaned to Semersky’s other businesses by VIP totaled
$2,436,335.20 at that time. (Doc. 15-13).
Thereafter, Plaintiffs filed this lawsuit asserting three claims for relief. Count one is a
claim for breach of the CBAs between the parties. Count two is a claim for breach of fiduciary

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duty. Count three is a claim for prohibited transactions under ERISA. When VIP went into
receivership, it moved to stay the case. The Court granted that stay as to VIP only, and allowed
the case to continue as to Semersky. Plaintiffs move for summary judgment with respect to
Counts 2 and 3 against Semersky. Semersky is not a party to Count 1, and Plaintiffs have not
moved on that Count. Semersky has not opposed the motion.
STANDARD OF REVIEW
Summary judgment is appropriate when no genuine issues of material fact exist and the
moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317,
322-23 (1986) (citing Fed. R. Civ. P. 56(c)); see also LaPointe v. UAW, Local 600, 8 F.3d 376,
378 (6th Cir. 1993). The burden of showing the absence of any such genuine issues of material
facts rests with the moving party:
[A] party seeking summary judgment always bears the initial
responsibility of informing the district court of the basis for its
motion, and identifying those portions of “the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with affidavits,” if any, which it believes demonstrates the
absence of a genuine issue of material fact.
Celotex, 477 U.S. at 323 (citing Fed. R. Civ. P. 56(c)). A fact is “material only if its resolution
will affect the outcome of the lawsuit.” Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986).
Accordingly, the nonmoving party must present “significant probative evidence” to demonstrate
that “there is [more than] some metaphysical doubt as to the material facts.” Moore v. Philip
Morris Cos., Inc., 8 F.3d 335, 340 (6th Cir.1993). The nonmoving party may not simply rely on
its pleading, but must “produce evidence that results in a conflict of material fact to be solved by
a jury.” Cox v. Kentucky Dep’t. of Transp., 53 F.3d 146, 150 (6th Cir. 1995).
The evidence, all facts, and any inferences that may permissibly be drawn from the facts
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must be viewed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Eastman Kodak Co. v. Image Technical Servs.,
Inc., 504 U.S. 451, 456 (1992). However, “[t]he mere existence of a scintilla of evidence in
support of the plaintiff's position will be insufficient; there must be evidence on which the jury
could reasonably find for the plaintiff.” Anderson, 477 U.S. at 252.
Summary judgment should be granted if a party who bears the burden of proof at trial
does not establish an essential element of his case. Tolton v. American Biodyne, Inc., 48 F.3d
937, 941 (6th Cir. 1995) (citing Celotex, 477 U.S. at 322). Moreover, if the evidence is “merely
colorable” and not “significantly probative,” the court may decide the legal issue and grant
summary judgment. Anderson, 477 U.S. at 249-50 (citation omitted). In the event that a party
does not respond to a motion for summary judgment, Federal Rule of Civil Procedure 56(e)
provides that summary judgment may still be entered if the motion and supporting materials,
including undisputed facts, show that the movant is entitled to it.
ANALYSIS
A. Count Two (Breach of Fiduciary Duty)
Plaintiffs argue that Semersky breached his fiduciary duty to the Funds. In order to
establish this claim, Plaintiffs must first show that Semerksy was a fiduciary to the Funds.
Semersky admitted that he was a fiduciary in his Answer to Plaintiffs’ Complaint. (Docs. 1 and
5, ¶¶ 6, 38).
Further, Plaintiffs present sufficient evidence to establish that Semersky was a fiduciary.
The ERISA definition of fiduciary includes any person “who exercises any discretionary
authority or discretionary control respecting management of such plan or exercises any authority

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or control respecting management or disposition of its assets.” 29 U.S.C. § 1002(21)(A).
Plaintiffs present evidence that Mr. Semersky exercised discretionary authority or control over
VIP’s finances. See Docs. 1, 5 ¶¶ 27-31 (Mr. Semersky owned VIP, had the authority to obligate
VIP, was the principal officer responsible for VIP, and made the decisions about how VIP spent
its money.). Additionally, Plaintiffs demonstrate that VIP’s unpaid benefit contributions
constituted plan assets at the time they became due. Traditionally, “unpaid employer
contributions are not assets of a fund unless the agreement between the fund and the employer
specifically and clearly declares otherwise.” Road Sprinkler Fitters Local Union No. 669, U.A.,
AFL-CIO, et al. v. Dorn Sprinkler Co., et al., 2010 WL 1849341, *5 (S. D. Ohio May 4, 2010).
Plaintiffs point to three applicable trust agreements which contain language sufficient to
establish that unpaid contributions were plan assets at the time they became due:
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The Ohio Bricklayers Health & Welfare Trust Fund Restated Agreement and
Declaration of Trust, Amendment No. 3: “[C]ontributions or other monies
received from or owing from an Employer and/or an individual(s) who has
control over the payment of such contributions shall be deemed Trust Fund
Assets.” (Doc. 15-9, PageID # 644-45).

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The Amended and Restated Agreement and Declaration of Trust of the
Bricklayers & Trowel Trades International Pension Fund: “All moneys paid into
and/or due and owing the Trust Fund, including but not limited to fringe benefits
contributions due and owing to the Trust Fund, are plan assets and title to all such
monies shall be vested in and remain exclusively in the Trustees of the Fund.”
(Doc. 15-17, PageID # 969).

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The Amended Agreement and Declaration of Trust Bricklayers Local No. 55
Health and Welfare Fund: “The Employer contributions to be paid into the Trust
Fund shall not constitute or be deemed wages due to the Employees, and such
contributions shall not in any manner be liable for nor subject to the debts,
contracts or liabilities of the Employers, the Union or the Employees. However,
contributions or other monies received from or owing from an Employer and/or
an individual(s) who has control over the payment of such contributions shall be
deemed Trust Fund assets.” (Doc. 15-10, PageID # 740).

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Based on the express language set forth in these agreements and the other evidence presented by
Plaintiffs, the Court finds that Semersky was a fiduciary under ERISA.
As a fiduciary, Semersky had a responsibility to “discharge his duties with respect to a
plan solely in the interest of the participants and beneficiaries, and only for the purpose of
providing benefits to beneficiaries and covering administrative costs.” Briscoe v. Preferred
Health Plan, Inc., 578 F.3d 481, 485 (6th Cir. 2009); 29 U.S.C. § 1004(a)(1)(A). Plaintiffs point
to evidence that Semersky used monies from VIP to support his other businesses. (Doc. 15-11,
PageID# 794-97; Doc. 15-14). In fact, the parties stipulate that VIP’s business records reflect
that VIP made payments to or for the benefit of other companies during the relevant time period
which were not made for the benefit of VIP. (Doc. 14 ¶¶ 2-6). By the time VIP went into
receivership in 2017, VIP paid to Semersky’s other businesses a total of $2,436,335.20 (Doc. 1513). Meanwhile, VIP was not paying the contributions owed to the Funds. (Doc. 15-6, ¶¶ 5-6).
These actions constitute a breach of Semersky’s fiduciary duty to the Funds.
Plaintiffs argue that Semersky should be held personally liable for the breach of his
fiduciary duty. Under ERISA § 1109, “[a]ny person who is a fiduciary with respect to a plan
who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this
subchapter shall be personally liable to make good to such plan any losses to the plan resulting
from each such breach.” 29 U.S.C. § 1109; see also Trustees of Iron Workers’ Local No. 25
Pension Fund v. Mun. & Indus. Storage, Inc., 2011 WL 1515047, *4 (E.D. Mich. Mar. 24,
2011). This Court has found that Semersky breached his fiduciary duty to the Funds. In
addition, Semersky does not oppose the motion and, therefore, concedes that he breached his
fiduciary duty to the Funds. As such, the Court agrees with Plaintiffs that Semersky is

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personally liable for the amount owed to the Plaintiffs.
Because Plaintiffs establish that there is no genuine issue as to any material fact that
Semersky was a fiduciary to the Funds and violated his fiduciary duties therein, they are entitled
to summary judgment on Count Two.
B. Count Three (Prohibited Transactions under ERISA)
Plaintiffs argue that Semersky violated ERISA by permitting the diversion or lending of
employer contributions from the Funds for the benefit of a “party in interest.” Semersky
admitted to this allegation in his answer to Plaintiff’s complaint. (Docs. 1 and 5 ¶ 39).
Moreover, Plaintiffs present sufficient evidence to support their charge. ERISA specifically
prohibits certain types of transactions between plans and “parties in interest,” including the
“transfer to, or use by or for the benefit of, a party in interest, of any assets of the plan.” 29
U.S.C. § 1106(a)(1)(D). The term “party in interest” is defined as “any fiduciary, a person
providing services to the plan, an employer whose employees are covered by the plan, and
certain shareholders and relatives.” Chao v. Hall Holding Co., 285 F.3d 415, 424 (6th Cir.
2002); 29 U.S.C. § 1002(14)(A). VIP, an employer whose employees were covered by the
Plans, and Semersky, a plan fiduciary, are both “parties in interest” under this definition.
As set forth above, there is no genuine issue of material fact that Semersky used plan
assets for his own benefit by using VIP funds to support himself and his other businesses. For
example, VIP paid for the liquor permit for one of Semersky’s restaurants (PAGEID# 799-800),
a consultant and other individuals who did work for Semersky’s other companies (PAGEID#
794, 800), and Semersky’s Shoreby Club membership (PAGEID# 795). These transactions are

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prohibited under ERISA.1 Therefore, Plaintiffs are entitled to summary judgment against
Semersky on Count Three.
C. Damages
Plaintiffs present audit reports and calculations by the Fund Administrator to
establish the amount of damages owed by Semersky. The Sixth Circuit has affirmed awards of
delinquent contributions based on auditors’ reports where employers failed to offer sufficient
evidence in rebuttal. Trs. of the Painters Union Deposit Fund v. Ybarra Constr. Co., 2004 WL
2334145 (6th Cir. 2004) (rejecting the use of an unsworn statement and deposition testimony to
challenge an auditor’s calculation of damages); Trs. of Detroit Carpenters Health & Welfare
Fund v. River City Constr. Co., 2004 WL 1166544 (6th Cir. 2004) (“in the absence of evidence
from [defendant] demonstrating the actual hours Union employees worked, the auditor’s report is
sufficient proof of the contributions owed to warrant summary judgment in these amounts.”).
Through the audits, Plaintiffs demonstrate that there is no genuine issue of material fact
that the Ohio Bricklayers Health and Welfare Fund (“Ohio Fund”) is entitled to $17,508.71,
which represents the unpaid contributions through September 30, 2016, with interest, and
liquidated damages calculated through December 31, 2017. (Doc. 15-1 ¶ 5). Additionally, the
Ohio Fund is owed interest and liquidated damages on VIP’s late contributions during the period
April 2015 through April 2017 in the amount of $31,538.22. (Doc. 15-6 ¶ 6). In total, Plaintiffs

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Plaintiffs also argue that it is undisputed that Semersky diverted
plan assets for the benefit of VIP by paying VIP’s other creditors
without paying the Funds from 2012 to present. However, Mr.
Semersky denied this allegation in the Answer (Doc. 5, ¶ 32), and
Plaintiffs have not pointed to any evidence substantiating this
allegation.
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show that Semersky owes the Ohio Fund $49,046.93, which represents unpaid fringe benefit
contributions found to be due and owing through September 30, 2016, and the liquidated
damages and interest found to be due and owing through December 31, 2017. (Doc. 15-1 ¶ 5).
Plaintiffs also establish that there is no genuine issue of material fact that the Bricklayers
and Trowel Trades International Pension Fund and International Masonry Institute
(“International Funds”) are entitled to $35,634.81, which represents the amount of delinquent
contributions through September 30, 2016, with interest, and liquidated damages calculated
through December 31, 2017. (Doc. 15-1 ¶ 5). In addition, Plaintiffs show that the International
Funds are entitled to an additional $31,292.93 in delinquent contributions, interest, liquidated
damages and costs. (Doc. 15-15 ¶ 20). Plaintiffs, therefore, sufficiently establish that the
International Funds are owed a total of $66,927.74, which represents the total unpaid fringe
benefit contributions found to be doing and owing through September 30, 2017, and the
liquidated damages and interest found to be due and owing through December 18, 2017.
Finally, Plaintiffs demonstrate that there is no genuine issue of material fact that the
Bricklayers and Allied Craftworkers Local No. 55 Pension Fund and Bricklayers and Allied
Craftworkers Local No. 55 Voluntary Employees Beneficiary Association are entitled to
$25,186.03, which represents unpaid fringe benefit contributions found to be due and owing
through December 31, 2017. (Doc. 15-1, ¶ 5).
Plaintiffs argue that they are also entitled to attorneys’ fees pursuant to the CBAs, the
plan documents, and ERISA. 29 U.S.C. § 1132(g)(2) provides:
In any action under this subchapter by a fiduciary for or on behalf of a plan
to enforce section 1145 of this title in which a judgment in favor of the plan
is awarded, the court shall award the plan –
(A) the unpaid contributions,
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(B) interest on the unpaid contributions,
(C) an amount equal to the greater of –
(i) interest on the unpaid contributions, or
(ii) liquidated damages provided for under the plan in an amount
not in excess of 20 percent . . . of the amount determined by the
court under subparagraph (A),
(D) reasonable attorney’s fees and costs of the action, to be paid by the
defendant, and
(E) such other legal or equitable relief as the court deems appropriate.
The Sixth Circuit has held that an award of reasonable attorneys’ fees under this section
is mandatory, not discretionary. Trustees for Mich. Laborers Health Care Fund v. Eastern
Concrete Paving Co., 1991 WL 224076 (6th Cir. Oct. 31, 1991) (“The language requires that the
court ‘shall award’ reasonable attorney’s fees when a ‘judgment in favor of the plan is
awarded.’”). The Court has determined that judgment shall be entered in favor of Plaintiffs and
against Mr. Semersky in this case. Thus, the Court agrees that Semersky is liable to Plaintiffs for
their reasonable attorneys’ fees.
CONCLUSION
For the foregoing reasons, Plaintiffs’ Motion for Summary Judgment (Doc. 15) is
GRANTED. The Court also grants Plaintiffs leave to file a properly supported motion for
attorneys’ fees and costs within fourteen (14) days of the date of this Order.
IT IS SO ORDERED.

/s/ Patricia A. Gaughan
PATRICIA A. GAUGHAN
United States District Court
Chief Judge
Dated: 2/16/18

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