870 F.2d 1079 (6th Cir. 1989), 87-5511, Scarbrough v. Perez

Docket Nº:87-5511.
Citation:870 F.2d 1079
Party Name: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.
Case Date:March 22, 1989
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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Page 1079

870 F.2d 1079 (6th Cir. 1989)

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

March 22, 1989

Argued Feb. 18, 1988.

Page 1080

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,

Page 1081

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...

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