605 F.2d 1105 (9th Cir. 1979), 76-3232, Seymour v. Hull & Moreland Engineering

Docket Nº:76-3232.
Citation:605 F.2d 1105
Party Name:CA 79-3693 Joseph H. SEYMOUR, Harold Edwards, C. W. Burke, John L. Connolly, Donald Meir, Richard L. Corbit, Robert Zahm, Arthur Preston, Gene Nicks, E. J. Strecker, H. C. Dennis and James Kirst, each in respective capacity as Trustee of the Operating Engineers Health & Welfare Fund, Joseph H. Seymour, Harold Edwards, C. V. Holder, John L. Connolly
Case Date:October 04, 1979
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 1105

605 F.2d 1105 (9th Cir. 1979)

CA 79-3693 Joseph H. SEYMOUR, Harold Edwards, C. W. Burke,

John L. Connolly, Donald Meir, Richard L. Corbit, Robert

Zahm, Arthur Preston, Gene Nicks, E. J. Strecker, H. C.

Dennis and James Kirst, each in respective capacity as

Trustee of the Operating Engineers Health & Welfare Fund,

Joseph H. Seymour, Harold Edwards, C. V. Holder, John L.

Connolly, Donald Meir, Richard L. Corbit, Robert Zahm,

Arthur Preston, Steve Harrison, E. J. Strecker, H. C.

Dennis, Gene Nicks, James Kirst and J. C. Maxwell, each in

his respective capacity as Trustee of the Operating

Engineers Pension Trust, Plaintiffs-Appellants,

v.

HULL & MORELAND ENGINEERING, a partnership, and

Hull-Moreland & Associates, Inc., a corporation,

Defendants-Appellees,

and

International Union of Operating Engineers, Local Union No.

12, AFL-CIO, Plaintiff in Intervention.

No. 76-3232.

United States Court of Appeals, Ninth Circuit

October 4, 1979

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[Copyrighted Material Omitted]

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Wayne Jett, Los Angeles, Cal., Goldstein, Freedman, Ownbey & Klepetar, Los Angeles, Cal., for plaintiffs-appellants.

Ronald J. Klepetar, Los Angeles, Cal., for defendants-appellees.

Appeal from the United States District Court for the Central District of California.

Before BROWNING and ANDERSON, Circuit Judges, and CLAIBORNE, [*] District Judge.

J. BLAINE ANDERSON, Circuit Judge:

Plaintiffs appeal from a judgment below partially denying them recovery against Hull & Moreland Engineering, a partnership, for contributions allegedly due employee trust funds under the terms of a collective bargaining agreement. Plaintiffs assign various other errors, which we discuss herein. We affirm in part, and reverse in part.

Jurisdiction below was based upon § 301(a) of the Labor Management Relations Act, 29 U.S.C. § 185(a).

I. THE PROCEEDINGS BELOW

Plaintiffs, in their capacities as trustees of the Operating Engineers Health and Welfare Fund and of the Operating Engineers Pension Trust, respectively (trustees), brought an action against defendant Hull & Moreland Engineering, a partnership (partnership), for contributions allegedly due these trusts under the terms of collective bargaining agreements entered into with the International Union of Operating Engineers Local Union No. 12, AFL-CIO. The complaint was later amended to include Hull-Moreland & Associates, Inc., (corporation), as a defendant. The International Union of Operating Engineers (union), intervened as plaintiff, but no issue raised by the intervention is involved in this appeal.

After a bench trial, the district court entered judgment in favor of the trustees against the partnership in the amount of $1,557.07 for contributions due the Operating Engineers Health & Welfare Fund plus liquidated damages, attorneys' fees, and costs, and in favor of the Operating Engineers Pension Trust in the amount of $2,768.95 in unpaid fringe benefit contributions plus liquidated damages, attorneys' fees, and costs. According to the Amended Findings of Fact and Conclusions of Law, the partnership was liable for contributions for a period beginning January 1, 1968, through February 28, 1969, at which time the corporation became liable for contributions to the respective funds, and the partnership ceased to be liable. 1 Judgment was entered against the corporation in favor of the Operating Engineers Health & Welfare fund in the amount of $4,550.55 for unpaid fringe benefit contributions plus liquidated damages, attorneys' fees and costs. Judgment was entered in favor of the Operating Engineers Pension Trust against the corporation in the amount of $8,376.90 plus liquidated

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damages, attorneys' fees and costs. The corporation's liability was based upon the employment of persons covered by the agreement during the period of March 1, 1969, through on or about December 31, 1973.

Plaintiffs' primary contention on appeal is that the district court erred in not holding the individual members of the partnership liable for the full amount of the contributions due the trustees, and in allowing the partners to use the corporate shield for the period after February 28, 1969. Plaintiffs also challenge rulings by the district court that certain individuals employed were "independent contractors" for whom no contributions were due, that "travel time" need not be designated on the employees' pay stubs in order to avoid contribution liability, and plaintiffs also challenge the limitation on the award of the attorneys' fees.

Neither defendant filed a cross-appeal.

II. THE FACTS

Unless otherwise indicated, the development of the facts herein is taken from the district court's finding.

In December 1967, defendant Hull & Moreland Engineering, a partnership in which Herb Hull and Carl Moreland were the only general partners, signed a short-form collective bargaining agreement with the International Union of Operating Engineers, Local No. 12, which incorporated the terms of the Master Survey Agreement between the union and local chapters of the California Council of Civil Engineers and Land Surveyors. Included in the agreement was an article requiring the employers to pay a certain amount into two fringe benefit trust funds per each hour worked by employees covered by the agreement.

Almost from the inception of the agreement, Hull and Moreland failed to make full contributions to the two pension funds. The district court found that the partnership failed to pay the fringe benefits on some 5,428 hours worth of work during a period stretching from January 1, 1968, through February 28, 1968. On or about March 1, 1968, the partnership incorporated. The district court found that the corporation had underpaid the fringe benefit funds for 12,237.5 hours during the period from March 1, 1969, through December 31, 1973.

According to uncontroverted testimony, the partnership informed neither the union nor the trustees of its change to the corporate form. In fact, the trustees failed to name the corporation as a defendant in their original complaint, and did not learn of its existence until pretrial discovery. According to testimony and exhibits, the corporation continued to use printed checks bearing the partnership name for some time after incorporation, but later began using printed checks bearing the corporate name to make payments to the fringe benefit funds. The district judge found that the corporation was a valid successor to the partnership's business.

Among the employees of the partnership was a surveyor, Harold Hardin. Hardin apparently became a licensed surveyor around May 1969. The district court found that Hardin was an independent contractor for the corporation, and performed 12,276 hours of work for the corporation from May 1969, through September 1973. The corporation did not make, and was not obligated to make, contributions for this time, according to the district judge. Beginning October 1, 1973, Hardin did some of his work through a corporation known as Kern Engineering. Herb Hull and Carl Moreland were corporate officers of Kern Engineering and owned 50% Of its stock. The corporation utilized Kern Engineering for 3,273.5 hours of work from October 1, 1973, through August 31, 1975. During the same period, Harold Hardin performed 1,379.5 hours of field survey work, and was paid either by Kern Engineering, or by the corporation directly. The court below found that the corporation was not liable for contributions for the time worked either by Hardin or for the time worked by other Kern Engineering employees.

The defendants raised as a defense the contention that certain of the contributions

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sought by the trustees were based on hours spent as "travel time." Article IX(L)(4) of the Master Survey Agreement required that all contributions for "travel time" be clearly designated as such on employee pay stubs. The defendants failed to designate the hours claimed as "travel time" on the stubs, but offered at trial a record of accounting in which travel time had been kept. The trial court found that the defendants were not liable for the claimed "travel time," Article IX(L)(4) notwithstanding.

From the evidence submitted, it could be inferred that the failure of both the partnership and the corporation to make the payments was deliberate, and motivated solely by economic considerations.

It would appear from the evidence submitted that the corporation now lacks sufficient assets to pay the judgment assessed below for the unsatisfied contributions, though there is some conflict in the evidence on this point.

Further details will be developed in the course of the opinion.

III. ISSUES PRESENTED ON APPEAL

1. Did the trial court err in refusing to pierce the corporate veil and find the partners Herb Hull and Carl Moreland individually liable for contributions due after February 28, 1969?

2. Did the trial court err in holding the defendants not liable to make contributions for the time worked by Harold Hardin and by employees of Kern Engineering?

3. Did the trial court err in allowing the defendants to deduct hours based upon "travel time" not reported on employee pay stubs from total contribution liability?

4. Did the trial court abuse its discretion in limiting the award of attorneys' fees to the trustees to $10,000?

IV. PIERCING THE CORPORATE VEIL

The trustees' main contention on appeal is that the district court should have pierced the corporate veil of Hull-Moreland Associates, Inc., and held Herb Hull and Carl Moreland, the sole shareholders of the corporation, liable for unpaid contributions due the fringe benefit funds after February 28, 1969. The...

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