Bd of Trustees, Trucking Employees v. Kero

Decision Date12 July 2004
Docket NumberNo. 03-2176, 03-2344, 03-3283, 03-3448.,03-2176, 03-2344, 03-3283, 03-3448.
PartiesBOARD OF TRUSTEES OF TRUCKING EMPLOYEES OF NORTH JERSEY WELFARE FUND, INC-PENSION FUND v. KERO LEASING CORPORATION, a New Jersey Corporation; Robert C. Holmes, a proprietor, individually, jointly and severally; Holmes Leasing Company, a proprietorship Robert C. Holmes v. Board of Trustees of Trucking Employees of North Jersey Welfare Fund, Inc.-Pension Fund Board of Trustees of Trucking Employees of North Jersey, Welfare Fund, Inc.-Pension Fund, Appellant Board of Trustees of Trucking Employees of North Jersey Welfare Fund, Inc-Pension Fund v. Kero Leasing Corporation, a New Jersey Corporation; Robert C. Holmes, a proprietor, individually, jointly and severally; Holmes Leasing Company, a proprietorship Robert C. Holmes v. Board of Trustees of Trucking Employees of North Jersey Welfare Fund, Inc.-Pension Fund Robert C. Holmes, Appellant.
CourtU.S. Court of Appeals — Third Circuit

Appeal from the United States District Court for the District of New Jersey, Joseph A. Greenaway, Jr., J Elizabeth Roberto (Argued), Roberto Law Offices, Philadelphia, David W. New, Herbert New & David New, Bloomfield, N.J., for Appellant/Cross Appellee.

Arthur G. Telegen (Argued), Robert A. Fisher, Foley Hoag, Boston, MA, for Appellee/Cross Appellant.

Before RENDELL, BARRY and ROSENN, Circuit Judges.

RENDELL, Circuit Judge.

In these appeals we are called upon to determine the relevant statute of limitations for an action brought by the trustees of a pension fund to recover withdrawal liability. The appellee, Robert Holmes, is the former sole shareholder of a company that ceased making payments to the plan, and the former sole proprietor of another related company. The District Court held that the action instituted by the pension fund against Holmes was untimely, as the complaint was filed seven years after the cause of action accrued, one year beyond the statute of limitations set forth in the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. §§ 1381-1461. For the reasons set forth below, we will affirm in part and reverse in part.

I.

The appellant, Board of Trustees of Trucking Employees of North Jersey Welfare Fund, Inc. — Pension Fund ("the Fund"), is the plan sponsor of a multiemployer fund established under the Employee Retirement Income Security Act of 1974 ("ERISA"). 29 U.S.C. §§ 1002(37), 1301(3). Employers participating in the Fund's pension plan made contributions to the Fund based on terms set forth in collective bargaining agreements they negotiated with their employees.

Holmes was once the chief executive officer of a trucking company called Holmes Transportation Inc. ("HTI"). During the 1980s, Holmes created wholly-owned subsidiary companies to supply employees, equipment, and land to HTI. One of these companies was Holmes Leasing Company ("Holmes Leasing"), a sole proprietorship that owned and leased equipment to HTI. Another was Kero Leasing Corporation ("Kero"), a New Jersey corporation that provided employees to work at a certain HTI terminal. Holmes was the sole proprietor of Holmes Leasing and the sole shareholder of Kero. Kero entered into a collective bargaining agreement with the union representing its workers.1 The agreement required Kero to make contributions on behalf of its employees to the Fund's pension plan.

In March of 1987, Holmes agreed to sell HTI to Route Resources, a Canadian-owned holding company. The sale was consummated in September of 1988, and Kero's stock was included in the sale along with all interests in Holmes's sole proprietorships. In December of 1988, after Route Resources had assumed ownership and control of his businesses, Holmes retired to Florida. According to the Fund's complaint in this action, Kero stopped making contributions to the Fund in December of 1989, prior to the expiration of its duties under the collective bargaining agreement.2 As a result, an assessment for withdrawal liability was mandatory under the provisions of the MPPAA. See 29 U.S.C. § 1381. On February 27, 1990, upon realizing that Kero had withdrawn from the plan, the Fund sent a notice of the statutory assessment of withdrawal liability to Kero.

On March 7, 1991, after no payments were made by Kero, the Fund sent a letter to Route Resources regarding the default in payments, and the withdrawal liability was demanded in full. When Kero continued to default on its withdrawal liability payments, the Fund filed a complaint in the United States District Court for the District of New Jersey against Route Resources, alleging that it was under common control with Kero at the time of its withdrawal and was therefore responsible for the liability. No answer was filed, and on December 13, 1995, a default judgment was entered against Route Resources.

Notwithstanding its success in obtaining the default judgment, the Fund continued to be unable to collect any of the withdrawal liability. On January 8, 1998, counsel for the Fund sent a letter to Holmes asking him to appear for a deposition, to provide information about Route Resources, Kero, and any other related corporations that might be responsible for the withdrawal liability. The letter also specified the amount that Kero owed and noted that a default judgment had been entered against Route Resources. However, the letter did not contain any indication that the Fund would seek to impose liability on Holmes personally. Meanwhile, the Fund instituted the instant action by filing a complaint in the District of New Jersey on March 31, 1998, naming Kero, Holmes Leasing, and Holmes personally as defendants. After his deposition on July 22, 1998, Holmes received a copy of the complaint in this matter from the Fund's counsel. According to Holmes, this was his first notice that the Fund was seeking to collect the withdrawal liability from him.

II.

The Fund's complaint in the instant case demands judgment against all three named defendants, including Holmes personally, in the amount of the withdrawal liability, plus interest, attorneys' fees, and costs. Holmes was the only defendant to answer the complaint, and he is the only appellee to file a brief in this appeal. Initially, both the Fund and Holmes filed motions for summary judgment on the merits. The District Court denied both motions and referred the matter to arbitration in accordance with the MPPAA, 29 U.S.C. § 1401. The Court also ordered Holmes to make interim withdrawal liability payments to the Fund while the arbitration was pending. See 29 U.S.C. § 1399(c)(2); Bd. of Trs. of Trucking Employees of N. Jersey Welfare Fund, Inc. — Pension Fund v. Centra, 983 F.2d 495, 507 (3d Cir.1992).

During arbitration, Holmes argued, inter alia, that the Fund failed to provide notice of its intention to seek the withdrawal liability from Holmes personally "as soon as practicable" after Kero's withdrawal, as required by 29 U.S.C. § 1399(b)(1), and should therefore be barred from assessing the withdrawal penalty against him. In December of 2001, the arbitrator issued an opinion agreeing with Holmes and dismissing the Fund's claim for withdrawal liability.3 While the arbitration was proceeding, the Fund appealed the District Court's order denying summary judgment and referring the matter to arbitration. Holmes cross-appealed and moved to reopen the record to explore whether the six year statute of limitations under the MPPAA had expired, based on the fact that, during discovery related to the arbitration, he became aware for the first time that the Fund had sent a letter in March of 1991 accelerating the withdrawal liability. Accordingly, he urged that the action commenced in 1998 should be dismissed as untimely.

Another panel of our court considered these appeals and remanded the matter in September of 2001, directing the District Court to determine whether the statute of limitations had expired prior to the filing of the 1998 action. The District Court reopened the record, and the parties filed another round of motions for summary judgment. The Court ultimately granted summary judgment in favor of Holmes on April 22, 2003, and ordered the Fund to reimburse him in an amount equal to the interim payments, interest, attorneys' fees and costs Holmes had already paid to the Fund as required by the MPPAA, as well as interest on those payments. The Court first determined that the cause of action accrued with the sending of the March 1991 letter. See Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., Inc., 522 U.S. 192, 194, 118 S.Ct. 542, 139 L.Ed.2d 553 (1997) (holding that a new statute of limitations starts to run with each missed payment or when payment of the debt is accelerated). Strictly applying the six year statute of limitations in this case, the Court then concluded that the limitations period expired in 1997, and that the action was brought approximately one year too late.

The Fund urged the Court to characterize the 1998 action as an enforcement, as against Holmes, of the 1995 default judgment that had been entered against Route Resources. The Court rejected this theory, adopting reasoning similar to that employed in Central States, Southeast & Southwest Areas Pension Fund v. Mississippi Warehouse Corp., 853 F.Supp. 1053 (N.D.Ill.1994), and distinguishing controlled group liability under the MPPAA from other alter-ego theories of liability. In doing so, the Court declined to follow the lead of certain other New Jersey district courts that had permitted actions brought after the six year limitations period to proceed by characterizing them as enforcement actions against persons who were not previously named, but who were admittedly controlled group members with the defendants that had been named. The Court emphasized that Holmes had sold his interests in the entities in 1988 — before the liability arose and before notice of it was given — and that he...

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