Scarbrough v. Perez

• Citation: 870 F.2d 1079
• Decision Date: 22 March 1989
• Docket Number: No. 87-5511,87-5511
• Parties: , 10 Employee Benefits Ca 2397 Carl SCARBROUGH, As Trustee and Chairman of the Boards of Trustees of United Furniture Workers Pension Fund A and the United Furniture Workers Insurance Fund, on behalf of United Furniture Workers Pension Fund A and the United Furniture Workers Insurance Fund, Plaintiff-Appellant, v. Peter PEREZ, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 1079

870 F.2d 1079

57 USLW 2643, 10 Employee Benefits Ca 2397

Carl SCARBROUGH, As Trustee and Chairman of the Boards of Trustees of United Furniture Workers Pension Fund A and the United Furniture Workers Insurance Fund, on behalf of United Furniture Workers Pension Fund A and the United Furniture Workers Insurance Fund, Plaintiff-Appellant, v. Peter PEREZ, Defendant-Appellee.

No. 87-5511.

United States Court of Appeals Sixth Circuit.

Argued Feb. 18, 1988.

Decided March 22, 1989.

Deborah E. Godwin, Gerber, Gerber and Agee, Memphis, Tenn., James F. Gill (argued), Andrew Irving, New York City, for plaintiff-appellant.

William I. Kohn, South Bend, Ind., Ernest J. Szarwark (argued), Lynn C. Tyler, for defendant-appellee.

Before NELSON and NORRIS, Circuit Judges, and MARKEY, Chief Judge. ^*

DAVID A. NELSON, Circuit Judge.

This is an appeal from a summary judgment entered in favor of an individual defendant in an action brought under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Secs. 1001-1461, as amended by the Multi-Employer Pension Plan Amendments Act of 1980. The main question presented is whether the statutory language made the chief executive officer and indirect owner of a closely held corporation answerable personally for the corporation's delinquent contributions to two employee welfare benefit plans and for the liability incurred by the corporation upon its withdrawal from one of the plans, a multi-employer pension plan. We agree with the district court, 683 F.Supp. 659, that ERISA did not make the individual defendant personally liable for the obligations of his corporation.

I

Defendant Peter Perez was the sole owner of Perez, Inc., an Indiana corporation. In February of 1983 Perez, Inc. purchased all of the outstanding stock of Aeolian Pianos, Inc., a New York corporation. Aeolian had a book value of about $6.5 million and the purchase price was $3 million. Mr. Perez, who became the chief executive officer of Aeolian, personally guaranteed repayment of advances of working capital funds made to Aeolian by Citicorp Industrial Credit Corporation under a $10 million line of credit.

Aeolian, which manufactured pianos and piano parts at a factory in Tennessee, was obligated under a collective bargaining agreement to make monthly payments to the trustees of a multi-employer health insurance plan and a multi-employer pension plan. The required payments were made through 1984, but Aeolian experienced increasing difficulty in competing successfully with Asian piano manufacturers at a time when demand for pianos was falling; early in 1985 Aeolian became unable to meet all of its obligations as they became due, and the corporation failed to make the required contributions to the health insurance and pension plans for February and March of 1985. Citicorp foreclosed its security interest in Aeolian's assets, and Aeolian laid off all its employees, ceased its manufacturing operations, and went into bankruptcy. The shutdown of the business resulted in Aeolian's incurring a "withdrawal liability" to the pension plan under 29 U.S.C. Sec. 1381.

The trustee of the plans brought the present action in federal court pursuant to 29 U.S.C. Sec. 1132, naming as defendants Perez, Inc. and Peter Perez individually. The complaint asserted claims against both defendants for Aeolian's delinquent contributions (the exact amount of which remained to be determined) and for withdrawal liability in the amount of $204,281.00. The complaint alleged, among other things, that Perez, Inc. and Aeolian constituted a "single employer" under 29 U.S.C. Sec. 1301(b)(1), and that Peter Perez was an "employer" under 29 U.S.C. Sec. 1002(5). An amended complaint also alleged that Mr. Perez was personally liable for the obligations of Perez, Inc. because that corporation was his "alter ego or instrumentality."

Perez, Inc. never responded to the complaint. Mr. Perez did respond, filing both an answer and a motion for summary judgment. In due course the district court (Julia Smith Gibbons, J.) entered an order granting the motion for summary judgment. The court held that the statutory provisions on which the plaintiff relied did not make Mr. Perez individually responsible for either the delinquent contributions or the Sec. 1381 withdrawal liability. The court held further that because the plaintiff had failed to allege use of the corporate form to commit some wrong or fraud, Mr. Perez could not be held personally liable on an "alter ego" or "mere instrumentality" theory:

"The only wrong alleged by plaintiff is the failure of Aeolian to pay into the insurance and pension funds, and its withdrawal from the pension fund. This is simply not the type of fraud or injustice which would require that the corporate veil be pierced. As defendant Peter Perez points out, the corporate veil cannot be pierced to satisfy every disappointed creditor. If this were done, a central purpose of incorporation--protecting officers and shareholders from personal liability--would be frustrated. Absent any allegation of wrongdoing on the part of Mr. Perez, the court declines to disregard the corporate form in the present case."

In a separate judgment entry under Rule 54(b), Fed.R.Civ.P., the court made an express determination that there was no just reason for delaying final judgment as to Mr. Perez, notwithstanding the pendency of the claim against Perez, Inc. The court expressly directed that "final judgment be entered for Peter Perez against the plaintiff." The plaintiff thereafter took a default judgment against Perez, Inc., and the case was referred to a magistrate for determination of damages. While the matter was in that posture the plaintiff filed a notice of appeal as to the judgment in favor of Mr. Perez.

II

Under 28 U.S.C. Sec. 1291, the finality of the judgment appealed from is a jurisdictional prerequisite that this court must consider even though the issue has not been raised by a party. Knafel v. Pepsi Cola Bottlers of Akron, Inc., 850 F.2d 1155 (6th Cir.1988). The district court did not set forth its rationale for determining that there was no just reason for delay and for directing the entry of an immediately appealable judgment as to only one of the two defendants, and in such a situation the district court's determination is entitled to no deference here. Knafel, 850 F.2d at 1159; COMPACT v. Metropolitan Government of Nashville & Davidson County, 786 F.2d 227, 231 (6th Cir.1986); Solomon v. Aetna Life Insurance Co., 782 F.2d 58, 62 (6th Cir.1986); Corrosioneering, Inc. v. Thyssen Environmental Systems, Inc., 807 F.2d 1279, 1282-83 (6th Cir.1986).

Unless we were prepared to make an independent search of the record to see whether circumstances existed that might justify the district court's action under Rule 54(b), we should ordinarily dismiss the appeal out of hand in a case such as this. The rule against piecemeal appeals would seem, on the face of things, to counsel against entertaining an appeal before determination of the dollar amount of the corporation's liability. At oral argument, however, counsel for the plaintiff abandoned the claim against Perez, Inc. The judgment for Mr. Perez is thus a complete and final disposition of the lawsuit, as a practical matter, and we shall therefore accept the determination made by the district court under Rule 54(b) and proceed to a consideration of the merits of the appeal.

III

Under the caption "Delinquent contributions," 29 U.S.C. Sec. 1145 provides as follows:

"Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement."

For purposes of the subchapter of which Sec. 1145 is a part, the term "employer" is defined thus:

"The term 'employer' means any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a group or association of employers acting for an employer in such capacity." 29 U.S.C. Sec. 1002(5).

The term "person," as used in Sec. 1002(5), "means an individual, partnership, joint venture, corporation, mutual company, joint-stock company, trust, estate, unincorporated organization, association, or employee organization." 29 U.S.C. Sec. 1002(9). (The failure to include "corporate officer" in this listing has sometimes been considered significant. See Solomon v. Klein, 770 F.2d 352, 354 (3d Cir.1985).)

Aeolian Pianos, Inc. was unquestionably an employer obligated to make contributions to multi-employer plans within the meaning of 29 U.S.C. Sec. 1145. The plaintiff trustee maintains that Peter Perez had a corresponding obligation because, as an individual acting indirectly in the interest of Aeolian in relation to the plans, he was subject to Sec. 1145 as a matter of law. The plaintiff finds support for this conclusion in several district court decisions, and he urges that the imposition of personal liability on an individual with the interest and control possessed by Mr. Perez would be consistent with such appellate decisions as Donovan v. Agnew, 712 F.2d 1509 (1st Cir.1983), and Donovan v. Grim Hotel Co., 747 F.2d 966 (5th Cir.1984), cert. denied, 471 U.S. 1124, 105 S.Ct. 2654, 86 L.Ed.2d 272 (1985). There the definition of "employer" in the Fair Labor Standards Act ("any person acting directly or indirectly in the interest of an employer in relation to an employee," with "person" meaning "an individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons," 29 U.S.C. Sec. 203), was held to make corporate officers personally liable for the corporation's statutory wage obligations.

The argument that ERISA ought to be given the same sort of broad interpretation as the ...