Holland et al v. Mate Creek Trucking Inc. et al

Filing 50

MEMORANDUM OPINION AND ORDER granting plaintiffs' 35 MOTION for Summary Judgment as to all claims; awarding the plaintiffs $427,301.00, and as directed and set forth more fully herein; directing the Trustees to submit an affidavit setting forth their costs and attorneys' fees within thirty days of the entry of the accompanying Judgment Order. Signed by Judge Joseph R. Goodwin on 1/10/2012. (cc: attys; any unrepresented party) (cjy)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION

MICHAEL H. HOLLAND, et al.,
Plaintiffs,
v.

CIVIL ACTION NO. 2:10-cv-01412

MATE CREEK TRUCKING INC., et al.,
Defendants.

MEMORANDUM OPINION AND ORDER

Pending before the court is the plaintiffs’ Motion for Summary Judgment [Docket 35].
For the reasons discussed below, this Motion is GRANTED.

I.

Background
A.

Facts

The plaintiffs, Michael H. Holland, Carlo Tarley, Daniel L. Fassio, and Morris D.
Feibusch are Trustees of the plaintiff United Mine Workers of America (“UMWA”) 1992
Benefit Plan (“1992 Plan” or “Plan”). They filed suit to recover amounts due under the Coal
Industry Retiree Health Benefit Act of 1992 (“Coal Act”) and a settlement agreement.
The 1992 Plan provides health care benefits to certain eligible coal industry retirees and
their eligible dependents.

It is funded primarily by premiums paid by the “last signatory

operator”—the last employer for whom the retirees worked under the UMWA contract. 26
U.S.C. §§ 9701(c)(1), (3), (4) and 9712(d)(6). Under the Coal Act, a last signatory operator is

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responsible for paying monthly premiums for each eligible beneficiary of that operator. 26
U.S.C. § 9712(d)(3). In addition, “any related person to any such operator, shall be jointly and
severally liable with such operator for any amount required to be paid by such operator.”1 26
U.S.C. § 9712(d)(4). According to the plaintiffs, the defendants—Mate Creek Trucking, Inc.,
Matecreek Security, Inc., and Summit Equipment & Leasing, Inc.—are related persons to Apex
Minerals, Inc. (“Apex”).
Apex, a West Virginia corporation, operated coal mines.

It was the last signatory

operator for two retirees and three dependents enrolled in the 1992 Plan.

Three of these

individuals remain in the Plan. In 1999, the Plan filed suit against a number of entities, including
Apex and the defendants in the instant dispute, in the Southern District of West Virginia seeking
premiums owed under the Coal Act. Holland, et al. v. Apex Minerals, Inc., et al., 2:99-cv-403.
The parties entered into a settlement and release agreement (“Apex Settlement” or
“Agreement”), under which the defendants in that suit agreed to pay the premiums and interest
owed to the 1992 Plan and to timely pay premiums as they came due. In exchange, the Plan
dismissed the suit with prejudice and released any claims for liquidated damages and attorneys’
fees. However, the Apex Settlement stipulates that “[t]he waiver by the 1992 Plan [of liquidated
damages and attorneys’ fees] shall be voidable if Defendants fail to comply with their promises
set forth in this Agreement.”2 (Pls.’ Mot. Summ. J. [Docket 35], at Ex. A-1, ¶ 7.)

The

Agreement also states that, “Defendants . . . Matecreek Security, Incorporation, . . . Mate Creek
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A related person is defined as: “(i) a member of the controlled group of corporations . . . which includes such
signatory operator; (ii) a trade or business which is under common control . . . with such signatory operator; or (iii)
any other person who is identified as having a partnership interest or joint venture with a signatory operator in a
business within the coal industry, but only if such business employed eligible beneficiaries, except that this clause
shall not apply to a person whose only interest is as a limited partner. A related person shall also include a successor
in interest of any person described in clause (i), (ii), or (iii).” 26 U.S.C. § 9701(c)(2).
2
This paragraph of the Agreement seems to contemplate that the plaintiffs can obtain statutory damages after they
contractually released the claims that conferred those damages. I interpret this paragraph instead to establish that
damages for breach of the Agreement shall include an amount equal to the liquidated damages and attorneys’ fees
that had been waived under the Apex Settlement.
2

Trucking, Inc., . . . [and] Summit Equipment & Leasing, Inc. . . . are related persons to Apex
Minerals, Inc. under the Coal Act, and as such are jointly and severally liable for the Coal Act
obligations of Apex Minerals, Inc. at issue in this case.” (Id. at ¶ 4.) The defendants do not
contest their designation as “related persons” in this suit. (Defs.’ Resp. Pls.’ Mot. Summ. J.
[Docket 42], at 2.)
According to the complaint, Apex and its related persons made monthly payments to the
1992 Plan through November 8, 2001. Since then, the plaintiffs allege that no payments have
been made. In January 2002, Apex filed a no asset Chapter 7 bankruptcy petition, which closed
without any distributions made to creditors. The plaintiffs filed their complaint on December 27,
2010. On September 8, 2011, the plaintiffs filed a Motion for Summary Judgment, which is now
ripe.
II.

Motion for Summary Judgment
A.

Standard of Review

To obtain summary judgment, the moving party must 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. FED.
R. CIV. P. 56(a). In considering a motion for summary judgment, the court will not “weigh the
evidence and determine the truth of the matter.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
249 (1986). Instead, the court will draw any permissible inference from the underlying facts in
the light most favorable to the nonmoving party.

Matsushita Elec. Indus. Co., Ltd. v. Zenith

Radio Corp., 475 U.S. 574, 587-88 (1986).
Although the court will view all underlying facts and inferences in the light most
favorable to the nonmoving party, the nonmoving party nonetheless must offer some “concrete
evidence from which a reasonable juror could return a verdict in his [or her] favor.” Anderson,

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477 U.S. at 256. Summary judgment is appropriate when the nonmoving party has the burden of
proof on an essential element of his or her case and does not make, after adequate time for
discovery, a showing sufficient to establish that element. Celotex Corp. v. Catrett, 477 U.S. 317,
322-23 (1986). The nonmoving party must satisfy this burden of proof by offering more than a
mere “scintilla of evidence” in support of his or her position. Anderson, 477 U.S. at 252.
Likewise, conclusory allegations or unsupported speculation, without more, are insufficient to
preclude the granting of a summary judgment motion. See Felty v. Graves-Humphreys Co., 818
F.2d 1126, 1128 (4th Cir. 1987); Ross v. Comm=ns Satellite Corp., 759 F.2d 355, 365 (4th Cir.
1985), abrogated on other grounds, 490 U.S. 228 (1989).
B.

Analysis

The plaintiffs first allege that the defendants, who are related persons to Apex, are liable
for their failure to pay monthly premiums as required by the Coal Act since November 8, 2001.
26 U.S.C. §§ 9712(d)(3), 9712(d)(4). The plaintiffs assert that because the court should enter
judgment in their favor, it must award them unpaid contributions, along with interest, liquidated
damages, and reasonable attorneys’ fees and costs. 29 U.S.C. § 1132(g)(2).
Second, the plaintiffs bring a breach of contract claim and allege that because the
defendants stopped paying monthly premiums as they came due, the defendants failed to comply
with the terms of the Apex Settlement. As a result of this breach, the plaintiffs argue that they
are entitled to an amount equal to the interest, liquidated damages, and attorneys’ fees and costs
that it claims to have released as part of the Agreement.
In their response, the defendants do not contest that Apex was the last signatory operator
for the two retirees covered by the Coal Act. They do not dispute that they are “related persons”
to Apex. In addition, the defendants do not provide any evidence rebutting the alleged failure to

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pay monthly premiums. Finally, they do not address the applicability of 29 U.S.C. § 1132(g)(2)
to award interest, liquidated damages, and attorneys’ fees and costs. Instead, the defendants
appear to contend that the statute as written is “flawed” and unwise from a policy perspective
because it permits recovery against persons who “were never signatories to any National
Bituminous Coal Wage Agreement” or “engaged in active mining of coal” when the last
signatory operator is no longer in business. (Defs.’ Resp. Pls.’ Mot. Summ. J., at 4.)

Such a

contention should be raised with the legislature rather than the court. The defendants also claim
that they filed for dissolution as West Virginia corporate entities on August 25, 2011.
Consequently, “such claims as this civil action should be treated as pending and become part of
the orderly dissolution of the company as opposed to adjudication by summary judgment.” (Id.
at 6.)
I first examine the defendants’ liability under the Coal Act for their failure to pay
monthly premiums since November 8, 2001. The Coal Act provides that “[a]ny last signatory
operator . . . shall pay the monthly per beneficiary premium . . . for each eligible beneficiary . . .
attributable to that operator.” 26 U.S.C. § 9712(d)(3). In contrast, liability under the two other
plans, the Combined Benefit Fund and individual employer plans (“IEPs”), is limited to
signatory operators who “remain[] in business.”3 26 U.S.C. §§ 9706(a), 9711(a). As the Second
Circuit explained in In re Olga Coal Co.,
The [Coal] Act provides that liability to the Combined Fund or to IEPs is limited
to operators still “in business.” See §§ 9706(a), 9711(a). Regarding the 1992
Plan, however, Congress extended liability to “1988 last signatory operators,”
§ 9712(d)(1), and other “last signatory operators,” § 9712(d)(3), with no language
limiting liability to operators still “in business.” This unambiguous textual
distinction strongly suggests that Congress intended to exempt signatory operators
no longer in business from the requirements of §§ 9706 and 9711, but not from
§ 9712.
3

A person is “considered to be in business if such person conducts or derives revenue from any business activity,
whether or not in the coal industry.” 26 U.S.C. § 9701(c) (7).
5

159 F.3d 62, 66 (2d Cir. 1998) (emphasis in the original). “Related persons” are “jointly and
severally liable with such operator for any amount required to be paid by such operator.” 26
U.S.C. § 9712(d)(4). The statute does not limit liability to related persons that are in business.4
There is, however, a different limit on the liability of a corporation to the Plan. Judge Faber, in
Holland v. Kitchekan Fuel Corp., asked “whether a dissolved corporation remains liable for
contributions to the 1992 Plan.” 137 F. Supp. 2d 681, 684 (S.D. W. Va. 2001). The court drew a
distinction between dissolved corporations that are “dead” and those that are “dead and buried.”
Id. at 686. A corporation is merely “dead” when it has dissolved but has not completed
distributing its assets. Id. Such a corporation remains liable to the 1992 Plan. If a corporation
has distributed its assets completely, it is “dead and buried,” and not amenable to suit. Id. Judge
Faber also distinguished Kitchekan Fuel Corp. from In re Olga Co., which held that companies
still in existence but no longer in business were obligated to contribute to the 1992 Plan. Id. at
687.
In the instant dispute, Apex is “dead and buried.” Apex filed a no asset Chapter 7
bankruptcy petition in January 2002. The petition was closed with no distributions made to
creditors. Therefore, under Kitchekan Fuel Corp., Apex is not amenable to suit and is not a
defendant in this case. The defendants, however, as related persons remain jointly and severally
liable for the amounts that Apex is required to pay. 26 U.S.C. § 9712(d)(4). Moreover, the
defendants cannot avoid liability under the Coal Act by relying on the Kitchekan Fuel Corp.
decision because they have not provided evidence showing that they are not only dissolved, but
also “dead and buried.” In West Virginia, “A corporation is dissolved upon the receipt by the
corporation of a certificate of dissolution from the secretary of state.” W. VA. CODE § 31D-144

Even if only related persons still in business could be held liable to the 1992 Plan, the defendants have not shown
that they are not in business as defined by the statute. See 26 U.S.C. § 9701(c)(7).
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1403(b). Although Matecreek Security, Inc. and Summit Equipment & Leasing, Inc. have filed
for dissolution in West Virginia, there is no evidence that either has received a certificate of
dissolution from the secretary of state. Mate Creek Trucking is a Kentucky corporation and there
is no evidence that it has dissolved either, even though it filed in West Virginia an “Application
for Certificate of Withdrawal from Certificate of Authority.” (Defs.’ Resp. Pls.’ Mot. Summ. J.,
at Ex. 1.) Even if the defendants had dissolved, they would have to show that they have
completely distributed their assets to shield themselves from liability to the 1992 Plan.
Accordingly, I FIND that the plaintiffs are entitled to judgment as a matter of law for the
defendants’ violations of the Coal Act, and the defendants are liable to the plaintiffs for unpaid
contributions, interest, liquidated damages, and attorneys’ fees and costs.
Next, the plaintiffs argue that the defendants breached the Agreement, and the court
should award the plaintiffs an amount equal to interest, liquidated damages, and attorneys’ fees
that they waived under the Apex Settlement. The Agreement states that the defendants agreed to
pay a sum of money, “representing all premiums and interest owed . . . through March 31, 2000.”
(Pls.’ Mot. Summ. J., at Ex. A-1, ¶ 1.) In addition, the 1992 Plan agreed “to release its claims for
and to waive the liquidated damages and attorneys’ fees to which it might otherwise by entitled.”
(Id. at ¶ 6.) But the Agreement states that if the defendants fail to comply with its terms, the
plaintiffs can seek an amount equal to the liquidated damages and attorneys’ fees that it waived.
The defendants do not contest the validity and enforceability of the Apex Settlement.
Additionally, they do not dispute that they stopped paying premiums as they came due—a
promise set forth in the Agreement. Accordingly, the defendants’ failure to comply with the
Apex Settlement entitles the plaintiffs to an amount equal to the liquidated damages and
attorneys’ fees that were waived in the Apex Settlement. The Agreement did not, however, state

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that the plaintiffs waived interest. And the amount paid was said to “represent[] all premiums
and interest owed.” (Id. at ¶ 1.) (emphasis added). As a result, I FIND that the plaintiffs are
entitled to judgment as a matter of law and the defendants are liable to the plaintiffs for an
amount equal to the liquidated damages and attorneys’ fees that had been waived under the
Agreement. Accordingly, I GRANT the plaintiffs’ Motion for Summary Judgment as to all the
claims.
C.

Damages

Under 29 U.S.C. § 1132(g)(2), the court “shall award the plan”: (a) unpaid contributions;
(b) interest on the unpaid contributions; (c) an amount equal to the greater of interest on the
unpaid contributions or liquidated damages provided for under the plan;5 (d) reasonable
attorneys’ fees and costs; and (e) such other legal or equitable relief as the court deems
appropriate. The plaintiffs have filed a declaration by Dale R. Stover, the Funds’ Director of
Finance and General Services. (Pls.’ Mot. Summ. J., at Ex. A.) Stover stated that the defendants
are delinquent in their obligations in the principal amount of $268,619.58 through August 15,
2011. Interest through August 15, 2011, on these delinquent obligations equals $67,109.61. In
addition, monthly premiums continue to accrue on the fifteenth of each month at $2,054.76 per
month, beginning with the premium due on September 15, 2011. Interest accrues after August
16, 2011, at a rate of $29.44 per day. The declaration further states that the plaintiffs are entitled
to an amount equal to interest on unpaid contributions—$67,109.61—because liquidated
damages were not provided for under the plan. The defendants do not contest any of these
calculations.

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Liquidated damages are “not in excess of 20 percent (or such higher percentage as may be permitted under Federal
or State law) of the amount determined by the court under subparagraph (A).” 29 U.S.C. § 1132(g)(2)(C)(ii).
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For the breach of contract claim, the plaintiffs are entitled an amount equal to the
liquidated damages and attorneys’ fees that had been waived under the Agreement. Stover’s
affidavit states that liquidated damages from the Apex Settlement equal $7,528.92.

The

defendants do not dispute this amount.
The court FINDS that the amount of damages is undisputed and awards the plaintiffs: (1)
$268,619.58 in unpaid contributions up to August 15, 2011; (2) $8,219.04 in unpaid
contributions for the months of September through December 2011 at a rate of $2,054.76 per
month; (3) $67,109.61 in interest on the unpaid contributions up to August 15, 2011; (4)
$4,357.12 in interest on unpaid contributions from August 16, 2011, to January 10, 2012; (5)
$71,466.73 representing the amount equal to the greater of interest or liquidated damages; and
(5) $7,528.92 representing the amount equal to liquidated damages that had been waived by the
Apex Settlement. In total, the plaintiffs are awarded $427,301.00. By statute, the Court is also
required to award the plaintiffs reasonable attorneys’ fees and costs for the plaintiffs’ failure to
comply with the Coal Act. Furthermore, the defendants are liable to the plaintiffs for an amount
equal to the attorneys’ fees from the 1999 suit because the defendants breached the Apex
Settlement. The Trustees are ORDERED to submit an affidavit setting forth their costs and
attorneys’ fees within thirty days of the entry of the accompanying Judgment Order.
The court DIRECTS the Clerk to send a copy of this Order to counsel of record and any
unrepresented party.
ENTER:

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January 10, 2012