325 Bleecker, Inc. v. Local Union No. 747

• Decision Date: 31 March 2007
• Docket Number: No. 02-CV-844 (NAM/DEP).,02-CV-844 (NAM/DEP).
• Citation: 500 F.Supp.2d 110
• Parties: 325 BLEECKER, INC., Plaintiff, v. LOCAL UNION NO. 747, United Brotherhood of Carpenters and Joiners of America (as successor to Local Union No. 120, United Brotherhood of Carpenters and Joiners of America), Defendants.
• Court: U.S. District Court — Northern District of New York

500 F.Supp.2d 110

325 BLEECKER, INC., Plaintiff, v. LOCAL UNION NO. 747, United Brotherhood of Carpenters and Joiners of America (as successor to Local Union No. 120, United Brotherhood of Carpenters and Joiners of America), Defendants.

No. 02-CV-844 (NAM/DEP).

United States District Court, N.D. New York.

March 31, 2007.

COPYRIGHT MATERIAL OMITTED

Edward F. Crumb, Esq., Binghamton, NY, for Plaintiff.

John H. Byington, III, Esq., Meyer, Suozzi, English & Klein, P.C., Mineola, NY, for Defendants.

MEMORANDUM — DECISION AND ORDER

MORDUE, Chief Judge.

Currently before the Court is defendant's motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Defendant, Local Union No. 747, United Brotherhood of Carpenters and Joiners of America (as successor to Local Union No. 120, United Brotherhood of Carpenters and Joiners of America) ("Local 747") seeks an order under Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185 (the "LMRA"), the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, and in accordance with Section 202(b) of the Labor Management Reporting and Disclosure Act, 29 U.S.C. § 431(b) (the "LMRDA"), which:

declar[es] that 325 Bleecker, Inc., formerly known as Carpenters Local No. 120 Building Corporation (the "Building Corp[oration]"), and all of its assets, including the property and premises located at 325 Bleecker Street, Utica, New York (the "Real Property"), have at all relevant times been assets of the former Carpenters Local Union No. 120 ("Local 120"), and subject to and governed by the Constitution and Laws of the United Brotherhood of Carpenters and Joiners of America (the "UBC" and "UBC Constitution"), including as of the date of the dissolution and transfer of assets of Local 120 by UBC General President Douglas J. McCarron, effective September 1, 2001; (b) declar[es] that all of the assets and property of the dissolved Local 120, including the Building Corp[oration] and the Real Property, are, as of September 1, 2001, the property and assets of Local 747 ... pursuant to the August 10, 2001, order and direction of dissolution and transfer of assets by UBC General President Douglas J. McCarron; (c) declar[es] that Local 747 be awarded possession, use and enjoyment of the Real Property; (d) declar[es] that the June 13, 2002 removal and interim appointment of officers of the Building Corp[oration] by Local 747's President pursuant to the UBC Constitution was valid and of full force and effect; and (e) permanently enjoin[s] and restrain[s] the former officers of the Building Corporation, including Edward Morgan, William Gibson, Patricia LaBella and Mike Juliano, their attorneys, representatives, agents and employees, from: (i) refusing to turn over any and all property, books, records, funds and assets of the Building Corp[oration], and that they do immediately turn over all such things; (ii) holding themselves out to others as officers or representatives of the Building Corp[oration]; (iii) acting on behalf of the Building Corp[oration]; (iv) interfering with or attempting to interfere with Local 747's rights under the UBC Constitution with respect to the possession and control of the Building Corporation and its assets and the Real Property; (v) asserting possession or control over the property and assets of the Building Corp[oration], including the Real Property and any funds on deposit with any bank in the name of the Building Corp[oration]; (vi) dissipating, transferring, encumbering or expending any type of assets of the Building Corp[oration], including the Real Property and any funds on deposit with any bank in the name of the Building Corp[oration]; (f) awards judgment in favor of Defendant and against the plaintiff, dismissing the petition herein in its entirety; and (g) awards such other and further relief as the Court deems just and proper.

Dkt. No. 27, Notice of Mot. plaintiff, 325 Bleecker, Inc., opposes this motion. See Dkt. No. 29. For the reasons that follow below, defendant's motion summary judgment is GRANTED.

I. BACKGROUND

A. Procedural History/Previous Proceedings¹

Plaintiff commenced this action in Utica City Court as an eviction action against Local 747 for its alleged failure to fulfill obligations under a written lease agreement made between Local 747's predecessor in interest, "Local 120," and 325 Bleecker, Inc., in its name as formerly known, the Local 120 Building Corporation. See Dkt. No. 13, Mem. of Law at 1. Local 747 subsequently removed the action to federal court pursuant to 11 U.S.C. §§ 1141 and 1146 and brought a counterclaim for declaratory and injunctive relief. See Dkt. No. 1, Notice of Removal; Dkt. No. 6, Mot. for Prelim. Inj.

The Court conducted a conference in which the parties discussed defendant's application for a temporary restraining order and request for a preliminary injunction hearing. See Dkt. No. 10, Minute Entry. The parties agreed to continue their settlement discussions; however, because they were unable to reach a settlement, the Court issued a temporary restraining order and directed the parties to appear for a preliminary injunction hearing. See Dkt. No. 12, Order to Show Cause. The Court held a hearing and issued a decision granting Local 747's motion for a preliminary injunction. See Dkt. No. 20, Order.

B. Underlying Dispute

The parties' dispute arose out of a UBC consolidation action. The UBC dissolved Local 120 and consolidated it with Local 747 effective September 1, 2001; in essence, Local 747 subsumed Local 120 and Local 120 ceased to exist. In conjunction with the dissolution and merger of Local 120, the UBC ordered Local 120 to transfer all of its assets — property, accounts, books, records, and other assets — to Local 747. The parties disagreed as to whether the Building Corporation, as well as its "offspring," 325 Bleecker, Inc., was an asset of Local 120. See Dkt. No 7, Mem. of Law at 2.

Local 747 is a chartered local union of the UBC as was Local 120 until its dissolution. As such, both locals were — and Local 747 remains — subject to the UBC's Constitution and its leadership's directives. On August 10, 2001, UBC General President Douglas J. McCarron, in accordance with Section 6A of the UBC Constitution, dissolved Local 120 and merged its membership and jurisdiction into Local 747, effective September 1, 2001. Additionally, McCarron, in accordance with Section 30A of the UBC Constitution, ordered Local 120 to transfer all of its assets to Local 747. See Dkt. No. 27, Statement of Material Facts at ¶¶ 1-6; Dkt. No. 20, Order at 3-4.

Since the dissolution of Local 120 and its merger into Local 747, plaintiff, by its representatives and claimed officers, including Edward Morgan, have not transferred the property, books, records, and assets in the custody or control of 325 Bleecker, Inc. Similarly, plaintiff has not transferred the real property and premises located at 325 Bleecker Street, Utica, New York (the "Real Property") held in the name of the Building Corporation as formerly known, Carpenters Local No. 120 Building Corporation. See Dkt. No. 27, Statement of Material Facts at ¶¶ 7-8.

In 1994, Local 120 purchased the Real Property located at 325 Bleecker Street for use as its union hall. Local 120's executive board recommended the purchase for approval to its general membership who consented to the purchase on October 12, 1994. Local 120 assigned title to the Real Property to the Local 120 Building Corporation and approved a $70,000 transfer to the "building corporation fund." Local 120 further determined that its officers, president, vice president, secretary and treasurer, would similarly serve as the Building Corporation's officers. On October 20, 1994, the Local 120 Building Corporation received the deed, which transferred title of the Real Property to "Carpenters Local No. 120 Building Corporation." On October, 21, 1994, Local 120 also filed the Certificate of Incorporation for the Building Corporation with the New York Secretary of State. See Did. No. 20, Order at 4, 14; Dkt. No. 27, Statement of Material Facts at ¶¶ 9-14.

Under the Building Corporation's bylaws, as initially adopted, the officers of Local 120 were, by virtue of their position as officers of Local 120, designated as the officers and directors of the Building Corporation. The Building Corporations's bylaws provided that "active members in good standing of the Local 120] shall be members of the corporation ... upon any member of the [Local 120] failing to maintain himself as a member of said Local 120 in good standing, he shall, concurrently with his loss of membership of said Local 120, no longer be a member of the corporation." Id. at ¶¶ 16-17.

By 1995, the Building Corporation applied for and received tax-exempt status as an Internal Revenue Code Section 501(c)(2) real estate title holding corporation. As stated in its Certificate of Incorporation, the Building Corporation's purpose, was to hold "title to property, collecting income therefrom and turning over the entire amount thereof, less expenses, to an organization which itself is exempt under Internal Revenue Code Section 501(a). No part of the assets, income, or profit of the Corporation shall be distributable to, or inure to the benefit of, its members, directors or officers except to the extent permitted under the Not-for-Profit Corporation Law." See Dkt. No. 8, Byington Decl. at Ex. 3, Certificate of Incorporation.

Over the next five years, Local 120 approved and paid for renovations of the Real Property, which totaled some $45,000. See Dkt. No 20, Order at 4-5. On March 8, 1995, a general membership meeting of the Local 120 convened, and the membership authorized a $25,000 transfer from Local 120 to the Building Corporation. In May 1995, Local 120 allocated its negotiated wage increase to the Local 120 Building Corporation, which took effect in July 1995 and included an allocation of three cents per hour. On June 14,...