Bd. of Trs. of the Trucking Emps. of N. Jersey Welfare Fund, Inc. v. 160 E. 22ND St. Realty, LLC
| Decision Date | 02 September 2016 |
| Docket Number | Civil Action No.: 15-889 (ES) (JAD) |
| Parties | BOARD OF TRUSTEES OF THE TRUCKING EMPLOYEES OF NORTH JERSEY WELFARE FUND, INC.-PENSION FUND, Plaintiff, v. 160 EAST 22ND STREET REALTY, LLC et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
Pending before the Court is a Motion to Dismiss and, in the alternative as to Count 4 of the Complaint, a Motion for Partial Summary Judgment, filed by the Business Entity Defendants ("BEDs").1 (D.E. No. 32). Plaintiff—Board of Trustees of the Trucking Employees of North Jersey Welfare Fund, Inc.-Pension Fund ("Plaintiff" or "Pension Fund")—filed opposition, (D.E. Nos. 35, 45), and BEDs filed a reply, (D.E. No. 38). The matter is ripe for review.
The Court decides the Motion without oral argument. See Fed. R. Civ. P. 78(b). For the following reasons, BEDs' Motion for Partial Summary Judgment is GRANTED in part and DENIED in part; BEDs' Motion to Dismiss is GRANTED in part and DENIED in part.
The Pension Fund is "a multi-employer employee benefit plan as defined in [the Employee Retirement Income Security Act ("ERISA")]"; it "is comprised of Trustees that are fiduciaries as defined by ERISA" and it is "administered pursuant to ERISA." . Defendant Duramix Concrete Corporation ("Duramix") is "one of the many business entities comprising the Alessi Family Enterprise" (the "Enterprise"), (id. ¶ 24), which Plaintiff alleges is a collection of business entities owned by members of the Alessi family, .3
BEDs are business entities organized and registered in the State of New Jersey—with the exception of Defendant South Cove Management, LLC, which is organized as a Delaware business entity and registered to conduct business in New Jersey as a foreign business entity—and constitute members of the Enterprise. . Defendant Vincenzo Alessi "is the Principal and President of [BEDs], as well as a shareholder and/or member of the business entities comprising the Alessi Family Enterprise." (Id. ¶ 13).
Plaintiff, upon information and belief, alleges that BEDs presently are owned by some combination of Vincenzo Alessi, Susan Alessi (Vincenzo Alessi's wife), Nancy Alessi (VincenzoAlessi's sister), and Francesco Alessi (Vincenzo Alessi's brother). (Id. ¶ 23). Additionally, Gaetano Alessi, Jr. and Salvatore Alessi, both of whom are brothers of Vincenzo Alessi, held "shares and/or ownership percentages of various" BEDs at "times relevant to this action." (Id.).
Two non-parties to this action are relevant to this exposition of the facts. The first, Teamsters Union No. 560 ("Local 560"), "is the sole and exclusive bargaining representative for a group of employees formerly employed by" Duramix. (Id. ¶ 11). The second, Personnel Coordinators, Inc. ("PCI"), is a company that contracted with Duramix to provide Duramix "various payroll and related services." (Id. ¶ 14). Local 560 "was signatory to collective bargaining agreements with" Duramix and PCI. (Id.).
On or about February 19, 2010, Duramix withdrew from the Pension Fund. (Id. ¶ 15). "A dispute arose over the withdrawal liability assessed against PCI and Duramix,"4 and the dispute "was submitted to arbitration before [a] neutral Arbitrator." (Id.). On November 21, 2011, the arbitrator awarded $1,924,787 to the Pension Fund to be paid by PCI and Duramix. (Id. ¶ 16; see also D.E. No. 32-2, Declaration of Vincenzo Alessi ("Alessi Dec."), Ex. B - Arbitrator's Opinion and Award ( )).
PCI filed a civil action seeking to set aside and vacate the arbitration award. (Compl. ¶ 17; see also Alessi Dec., Ex. C - Final Order and Opinion in Civil Action No. 11-7392 (D.N.J. Aug. 24, 2012) ("Dist. Ct. Op.")). "In response and opposition to PCI's Motion to Vacate, the Pension Fund cross-moved against Duramix and through which cross-motion Duramix was joined as a third-party defendant." (Compl. ¶ 18).
The Pension Fund and PCI reached a settlement, which reduced the amount owed to the Pension Fund to $1,316,901.60. (Id.; Dist. Ct. Op. at 2). On August 24, 2012, faced with cross-motions for summary judgment from the Pension Fund and Duramix, the Court entered judgment against Duramix in that amount. (See Compl. ¶¶ 19, 20; Dist. Ct. Op. at 2, 6).
The Pension Fund filed this action pursuant to 29 U.S.C. § 1381 to recover the withdrawal liability owed to it because of Duramix's withdrawal. (Compl. ¶ 1). Indeed, "[t]o date, the Pension Fund has not received any payment of the withdrawal liability from [Duramix] or any . . . Business Entity Defendant." (See id. ¶¶ 58-60).
Three BEDs are specifically discussed in the Pension Fund's Complaint. Alessi Organization Management Company, LLC ("AOM") "was a business entity founded by [Alessi] for the sole and express purpose of performing accounting, record keeping, billing and banking services for the various entities comprising the . . . Enterprise." (Id. ¶ 25). Bayonne Durable Construction Co., Inc. ("Bayonne Durable") provided construction and related services. (Id. ¶ 24). Durable Recycling, LLC ("Durable Recycling") also provided construction and related services. (Id.). AOM, Bayonne Durable, Durable Recycling, Duramix, various real estate entities in the Enterprise, and other various business entities of the Enterprise operated out of 160 East 22nd Street, Bayonne, New Jersey, at all times relevant to this action. (Id. ¶ 35).
Duramix operated a concrete plant and provided concrete to "various entities," including Bayonne Durable, Durable Recycling, and "various real estate entities" in the Enterprise. (Id. ¶ 38). That concrete was used to construct and develop the various locations owned and operated by the real estate entities in the Enterprise. (Id.). Duramix also provided trucking services. (Id. ¶ 49). Bayonne Durable transported sand to Duramix to use in the concrete plant, and Duramix provided concrete to Bayonne Durable in lieu of paying rent to Bayonne Durable for use of the concrete plant. (Id.). None of these transactions and exchanges of goods and services were effectuated by an exchange of funds, were subject to formal lease or lending agreements, or werecollateralized, and no interest was calculated or paid for amounts owing among and between the various entities. (Id.).
AOM provided management services to BEDs, utilizing the offices at 160 East 22nd Street to provide accounting, billing, and banking functions to the Enterprise, (id. ¶ 36), and charging "a flat fee of 10% of their gross sales in return for" AOM's services, (id. ¶ 26). But that 10% fee was not billed or invoiced to BEDs, nor was it regularly collected; instead, Vincenzo Alessi, "as Principal, President and/or Managing Member of [BEDs], in his sole discretion periodically determined which [BEDs'] fees would be collected by AOM, and in what amounts AOM would collect such fees." (Id. ¶ 27).
Duramix borrowed money from AOM and Bayonne Durable, and borrowed and loaned money to Durable Recycling. . At present, Duramix owes AOM approximately $5,000,000 resulting from the 10% service fee being applied to approximately $50,000,000 of gross sales by Duramix. (Id. ¶ 28). "In many cases," money that Duramix borrowed from Bayonne Durable was not paid back; instead, Duramix received credit toward the money it owed Bayonne Durable by providing concrete to Bayonne Durable free of charge. (Id. ¶ 43).
Duramix has failed to operate profitably since as far back as the late 1990's; indeed, "[f]rom 2008 to the present, despite generating gross sales in excess of $50,000,000, Duramix did not post a profit." (Id. ¶ 29).
The various entities in the Enterprise loaned money to each other, but "no formal lending agreements were executed, no collateral was pledged, interest on such loans was neither charged by the lending entity to the borrowing entities, nor did the borrowing entities pay interest on such loans to the lending entities." (Id. ¶ 30). The Enterprise chose to forego charging such interest,despite understanding the Internal Revenue Service's rules relating to charging interest on such loans, and instead decided to accept any penalties assessed by the IRS. (Id. ¶ 31).
Further, various BEDs would satisfy the financial obligations of other Enterprise entities by, for example, paying off mortgages and satisfying loans. (Id. ¶ 48). Satisfaction of such obligations was not performed subject to any memorialized agreement or collateralization. (Id.).
At all times relevant to this action, the entities in the Enterprise shared employees, office equipment, office space, and heavy machinery, including a street sweeper, and while the entities using the street sweeper remitted rental fees to Duramix for such use, no contract was executed to memorialize the terms for the use. (Id. ¶¶ 37, 47).
"At all times relevant to this action, Business Entity Defendants did not issue dividends to members or shareholders." (Id. ¶ 50).
The genesis of this dispute dates back to 2010 when, as discussed above, Duramix withdrew from the Pension Fund. After receiving an arbitration ruling in its favor in 2011, , and a District Court ruling confirming that arbitration award and entering judgment in its favor in 2012, (see Dist. Ct. Op.), the Plaintiff filed this action on February 5, 2015, (Compl.). Plaintiff's Complaint alleges the following counts against BEDs: Count 1 for "Withdrawal Liability," (id. at 15); Count 2 for "Single Employer/Alter Ego Liability," (id. at 17); Count 4 for "Control Group Liability," (id. at 26); Count 5 for "'Avoid and Evade' Liability," (id. at 27); and Count 6 for "Clawback Liability," (id. at 28).5
BEDs filed their original motion to dismiss (and/or for partial summary judgment as to Count 4) on June 22, 2015. (D.E. No. 17). After Plaintiff requested and was granted the opportunity to take limited...
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